The biggest property owners in the Mariner’s Mile area of Newport Beach have added another notable—and pricey—waterfront site as they continue an effort to revamp the high-traffic area.
A Newport Beach-based LLC with ties to the Moshayedi family recently closed on a roughly half-acre site on Coast Highway that holds the operations of Duffy Electric Boat Co.
The property, at 2001 West Coast Highway, traded hands for a little more than $9.5 million, or nearly $17.7 million per acre, according to CoStar Group Inc. records. It was sold by a local family trust.
The deal closed last month and is now among the most expensive deals on a per-acre basis in recent years for a Newport Beach property a half-acre or larger.
The Duffy Electric Boat operations will remain at the location, Manouch Moshayedi said last week. The boatyard draws steady traffic, with customers renting the flat-bottomed craft for rides around the harbor.
Manouch Moshayedi, the co-founder and one-time chairman and chief executive of Santa Ana-based computer storage device maker STEC Inc., and Mark Moshayedi—Manouch’s brother and an STEC co-founder—took out a $5 million loan from Morgan Stanley to finance the deal, according to property records.
Other family investors in the area include Mike Moshayedi, another brother with prior ties to STEC.
The latest deal marks another step in the family’s transition from the technology industry to the ranks of the largest privately held owners of commercial real estate in Orange County.
STEC was sold to a San Jose-based subsidiary of Irvine-based Western Digital Corp. in 2013 for $340 million. The company now operates as part of HGST Inc., a unit of Western Digital.
A good deal of the Moshayedi family fortune has been reinvested in commercial real estate since the STEC sale.
Mariner’s Mile has been a frequent source of their deal making. The family now is the biggest property owner on the strip of Coast Highway, which covers about 1.4 miles between Newport Boulevard and Dover Drive and is home to an eclectic mix of restaurants, offices and maritime-related businesses.
The family has spent more than $120 million over the past seven years on a variety of buildings and land along the stretch, according to property records.
“The area is a good long-term investment,” said Manouch Moshayedi, a resident of Newport Beach for the past 30 years. “These are one-of-a-kind properties.”
Real estate deals that the family has made outside Orange County haven’t always been of the long-term variety.
In 2010, the family’s MX3 Ventures LLC affiliate paid a reported $94.5 million for the Shoppes at Chino Hills, a 377,966-square-foot mall in the southwestern part of San Bernardino County.
MX3 sold the mall last October for $147 million to Dunhill Partners Inc., a Dallas-based investor.
Filling Gap
Two of the family’s largest real estate deals on Coast Highway were for the properties close to the just-acquired Duffy site.
In 2012, family members bought the Mariner’s Mile Marine Center, a collection of gray and white office buildings about a block north of the Duffy site, for $24.9 million.
The five-building, bayfront property includes about 36,000 square feet of office and retail space, plus nearly 11,000 square feet of shipyard and dock space. It also holds a service boatyard for Duffy Electric Boat, among other tenants.
MX3 Ventures paid an additional $71.7 million early this year for a 3.1-acre waterfront site between Mariner’s Mile Marine Center and the Duffy site, plus an additional 4.4-acre property on the opposite side of Coast Highway.
The waterfront site had long held the local offices of Ardell Yacht & Ship Brokers, which is now closed.
Other family investments in the area include the buildings that hold Joe’s Crab Shack and the Winery restaurant.
Manouch Moshayedi said he believes that unified ownership of that stretch of buildings and land should give the family a better opportunity to make improvements to Mariner’s Mile—an area long identified by the city as being ripe for redevelopment.
“Changes are needed—the area definitely needs revamping,” he said last week. “But I don’t think that’s going to happen with (a bunch of) single-property owners on the same street.”
Some of the Moshayedi family’s holdings on Coast Highway—in particular the boatyards—are zoned for higher density projects, city officials said.
Other properties likely would need changes in land-use designations in order to redevelop them.
Specific plans for redevelopment of the family’s properties have not been proposed.
“We want to see what the city and the community have to say” before moving ahead with any concrete plans, Moshayedi said.
Other property owners in the area tell the Business Journal that they expect mixed-use residential projects to be built on some of the sites.
Moshayedi has held informal meetings with Newport Beach city planning officials. In May he addressed the city council over proposed changes to that stretch of Coast Highway.
The city recently hired a consultant to study potential improvement to the area’s traffic flow and parking situation, which likely would include an expansion of that stretch of road to six lanes.
Moshayedi told officials at the city hearing that eliminating lights and speeding up traffic could have unintended consequences.
Creating what he called a six-lane “superhighway” would mean that the city could “kiss goodbye any viable retail” for Mariner’s Mile, he said.
Councilman Tony Petros said that any future improvements to the roads there would foster “a slow-moving, chugging road” rather than a superhighway, but noted that local business and property owners’ concerns needed to be addressed prior to making changes.
“The problem with Mariner’s Mile right now is there’s a complete lack of certainty” for businesses there, he said.
