Kearny Real Estate Co.’s departure from the South Coast Metro office market was a short-lived one.
The Los Angeles-based real estate developer and investor, which in November sold off its largest area property—the former Los Angeles Times printing press property in Costa Mesa—just bought another fixer-upper less than a mile away in Santa Ana.
The company paid $34.8 million for Colton Corporate Center, a two-building office complex on Harbor Boulevard between MacArthur Boulevard and Segerstrom Avenue.
The eight-acre campus’ buildings total 197,370 square feet, putting the sale at about $176 per square foot.
The seller was Irvine-based Colton Co., and the deal was brokered by Bob Smith and Anthony DeLorenzo with the Newport Beach-based office of CBRE Group Inc.
The multitenant buildings were more than 90% occupied at the time of the sale, according to records from market tracker CoStar Group Inc.
Kearny partner Hoonie Kang said his company plans to spend an additional $15 million to renovate the campus, which is being rebranded as Elevate@Harbor.
Built in 1982, the three- and five-story glass curtain-wall buildings were built on top of one level of podium construction, creating nearly an acre of open space under the buildings.
Kang said his firm will take advantage of the buildings’ unique structure, which can accommodate both full- and partial-floor tenants.
The outdoor area surrounding the first floor of the buildings “will be redesigned to incorporate outdoor areas that provide a mix of work, leisure and active spaces,” the new owners said in a statement.
The renovation of the ground-floor space will result in a “shared outdoor area set between the two buildings (that) will create a true campus feel and provide shared indoor-outdoor conference areas, meeting spaces” and other amenities, the company said.
Press Sale
The ambitious redevelopment plans for the property mirror that of Kearny’s former area investment a few blocks away in Costa Mesa.
In 2015, Kearny partnered with Chicago-based Tribune Media Co.—former owner of the L.A. Times and Chicago Tribune, among other daily newspapers—to head redevelopment of the former L.A. Times printing plant site.
The plan was to turn the nearly 24-acre, long-dormant site just north of the San Diego (405) Freeway, which holds about 360,000 square feet of office and warehouse space, into Orange County’s largest creative-office building.
Kearny and Tribune Media got the site near the intersection of Harbor and South Coast Drive entitled for The Press project, whose first phase called for a three-story, 340,000-square-foot creative office and a 1,277-space parking structure.
Later phases were to include two more ground-up offices totaling 315,000 square feet on excess space.
The project never started. In November, the partnership sold the site to Foster City-based developer and investor SteelWave LLC, which owns the creative-office project next door—The Hive, home to the Los Angeles Chargers.
The new owners of The Press plan to tweak development plans; which include building about 420,000 square feet of creative-office and retail space, including a food hall, in the first phase.
Having a cluster of creative offices next to the 405 Freeway makes sense from an ownership perspective, SteelWave officials said following its purchase.
SteelWave and financial partner Invesco paid about $65 million for the site, which early last year had a valuation of about $39 million, according to Tribune Media regulatory filings.
“The South Coast Metro West, which was once a pocket of industrial and older office product, is undergoing a transformation to office use, attracting dynamic companies, a millennial workforce and exciting amenities to the area,” Kang said.
“We have personally been witness to the area’s reinvention, having spent two years processing entitlements for The Press prior to its sale,” he said.
Other notable additions to the immediate area in the past few years include Vans’ recently completed headquarters, plus the SOCO and OC Mix retail centers.
The “South Coast Metro area is undergoing a tremendous renaissance,” said CBRE’s Smith.
Kearny has hired CBRE’s Carol Trapani and Allison Kelly to oversee leasing for Elevate@Harbor.
Santa Ana Moves
The sale marks another notable area disposition for privately held Colton Co., which has been shedding a number of longtime investments.
In November, an affiliate of the company sold Santa Ana’s Colton Financial Plaza, a 58,500-square-foot building just off the Santa Ana (5) Freeway.
An affiliate of subprime auto lender Veros Credit LLC, which occupies much of the space in the building at 2333 N. Broadway, paid about $8.6 million for the office, CoStar records show.
Colton Co. also sold a three-building office park in Long Beach last month for about $25.5 million, CoStar records show.
Outside of the just-bought Santa Ana property, Kearny Real Estate’s largest area holding is Newport Corporate Plaza, a multibuilding office park on Von Karman Avenue near John Wayne Airport.
Other projects it’s working on outside of OC include Emerald Tower, a 30-story office building in downtown San Diego that it’s renovating.
