Piedmont Office Realty Trust Inc. has sold its two Orange County office properties—in Irvine and Brea—for a combined $100 million.
The Johns Creek, Ga.-based real estate investment trust last week completed the sale of the two local properties, the larger of which—1901 Main St. in Irvine—is the most expensive single-building office sale reported in OC so far this year.
J&R Group LLC, an Irvine-based real estate investor that has a handful of other holdings in the city, bought 1901 Main St., an eight-story office at the intersection of Main Street and MacArthur Boulevard and a few blocks from John Wayne Airport.
The 173,000-square-foot building, which was fully leased, sold for $66 million, or $382 per square foot, according to Piedmont’s latest earnings report, which came out last week. Piedmont paid about $43 million for it in 2003.
The purchase is the largest in OC to date for J&R Group, which prior to the deal had an office portfolio on the West Coast totaling about 460,000 square feet, primarily in Irvine and Portland, Ore., according to the company’s website.
Its largest local acquisition prior to last week took place in 2014, when it paid a reported $36 million for 2525 Main St., a five-story office building and data center at the intersection of Cartwright Road and Main Street, a few blocks from the newly acquired building.
J&R Group has city approvals to convert 3 acres of excess land on the back side of the 2525 Main property into a 272-unit apartment project.
It’s one of two multifamily developments that J&R Group has in the works in Irvine; it also has plans to convert the site of an older industrial building it owns near the intersection of Jamboree Road and Alton Parkway into an apartment development.
The purchase of 1901 Main St. “was a strategic acquisition for them,” said Joe Bevan, executive vice president for the Irvine office of JLL who represented J&R Group in the purchase.
JLL will be providing property management services at 1901 Main St., where tenants include Conexant Systems Inc., Morgan Stanley and Bosch Home Appliances.
Jeff Cole and Ed Hernandez, brokers with the Irvine office of Cushman & Wakefield Inc., represented Piedmont in the sale to J&R Group.
Cole and Hernandez also represented Piedmont in the April 28 sale of the Fairway Center II office in Brea, a three-story office at 675 Placentia Ave. near the intersection of Imperial Highway and the Orange (57) Freeway.
The 134,000-square-foot office traded hands for $33.8 million, or $252 per square foot, according to Piedmont, which paid $23 million for the building in 2003.
An affiliate of Teachers Insurance and Annuity Association, which invests on behalf of people who work in the academic, research and medical fields, bought the Brea property.
Premium Price
In the case of the Irvine sale, the price paid by J&R Group marks an uptick in pricing for airport-area buildings, according to Cole.
The prior batch of high-end office sales in the airport area of Irvine—deals that closed toward the end of last year—came with prices between $340 and $350 per square foot, well below the $382-per-square-foot price paid for 1901 Main St., according to Cole.
Piedmont, an office owner whose national portfolio totals about 20 million square feet, in January listed its four-building Southern California office portfolio for sale.
Along with the two OC buildings, that portfolio includes a pair of buildings in the Los Angeles area. One of the two—a 176,000-square-foot office in Pasadena—sold in late April for $61.3 million, or $348 per square foot.
The other L.A.-area office—a tower at 800 North Brand Boulevard in Glendale—“didn’t get a number we were looking for” and was not sold, Chief Executive Donald Miller said last week.
