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Saturday, Jul 13, 2024

Charged Office Sale

The Costa Mesa office complex that’s home to the operations of the Los Angeles Chargers football team has traded hands at a 75% premium to its prior sale.

An affiliate of Dallas-based institutional investor Invesco Real Estate this month completed the purchase of the Hive, a three-building creative-office project on Susan Street just north of the San Diego (405) Freeway near the Ikea shopping center.

The roughly 180,000-square-foot property sold for $84 million, or about $465 per square foot, according to property records.

It’s one of the highest per-square-foot prices seen recently in an Orange County office sale outside Newport Beach. It’s also the priciest office sale in Costa Mesa in over two years, according to records from real estate market tracker CoStar Group Inc.

The complex was sold by a venture between New York-based finance giant Goldman Sachs and SteelWave LLC, a Foster City-based investor and developer of commercial, residential and mixed-use properties.

They paid $48 million for the complex three years ago when it was largely empty.

The property’s former owner and main tenant, Emulex Corp., a networking equipment maker, vacated the site after being sold to Avago Technologies Ltd. in 2015 for about $600 million.

Avago later acquired Irvine-based Broadcom and consolidated both chipmakers’ local operations in Irvine.

SteelWave and Goldman put about $18 million more into the property after Emulex’s departure, adding indoor-outdoor features, a gym, conference center and numerous other creative-office features.

The complex is now about 82% leased, according to marketing material from the Newport Beach capital markets team of Newmark Knight Frank, whose brokers listed the property for sale.

Long-Term Lease

The Chargers moved their headquarters to the Hive as part of their relocation from San Diego to the greater Los Angeles area. The team occupies the 100,000-square-foot building at 3333 S. Susan St., the largest building at the complex. The Chargers also use a 3-acre site at the complex as a practice football field.

The site where the football field is located is entitled for another 65,000 square feet of commercial development, although there’s no expectation that construction would move ahead while the Chargers are there.

The Chargers have about six years left on their lease, real estate sources tell the Business Journal.

The team currently plays home games in Carson, which is about 30 miles from the Hive. They will move to a new location in Inglewood in 2020.

Other large tenants at the Hive include Lazy Dog Café, Coding Dojo and Agility Fuel Solutions; the average weighted lease term for the current tenants is nine years, according to Newmark’s marketing materials.

At least one other sports-related venture has operations at the Hive. A number of businesses and philanthropic ventures affiliated with ex-Laker star and Newport Beach resident Kobe Bryant are based at the complex, according to state records.

Representatives of the buyers and sellers couldn’t be reached for comment, and officials with Newmark declined to comment on the transaction.

Marketing materials show that Newmark’s Kevin Shannon, Paul Jones, Blake Bokosky, Ken White and Brunson Howard represented Goldman and SteelWave in the sale.

Busy Street

Invesco, one of the most active institutional investors in Orange County in the past few years, with a variety of apartment and office buys to its name, is no stranger to the immediate area.

Last year, it was part of a venture that paid a reported $65 million for the former Los Angeles Times printing facility next door to the Hive.

The long-dormant, 24-acre L.A. Times site holds about 360,000 square feet of office and warehouse space. The new owners plan to redevelop it into OC’s largest speculative creative-office building The Press.

Invesco’s partner in the purchase was SteelWave, which sold them the Hive property.

Until 2015, SteelWave operated as Legacy Partners Commercial.

A time frame for construction moving ahead in earnest at The Press development hasn’t been disclosed.

At the time of the December 2017 purchase, the new owners said they were exploring a “high-end public market” concept alongside previously planned creative-office uses.

The first phase of The Press could be 420,000 square feet or so, the buyers said at the time.

That would leave about 230,000 square feet of remaining entitlements for future development, the new owners said.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.

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