Spectrum Tower, one of the largest office buildings in Laguna Hills, has been bought by an out-of-town investor—just the latest example of the city’s changing commercial real estate landscape.
Monday Properties, a New York-based property owner that opened a West Coast office this year, recently completed the purchase of Spectrum Tower, a seven-story building near the intersection of Lake Forest Drive and the San Diego (5) Freeway.
The Laguna Hills property, at 23046 Avenida de la Carlota, is nearly 120,000 square feet and about 90% leased to an assortment of tenants.
Spectrum Tower and Oakbrook Plaza, a similar-sized building about a mile and a half away, are the only two nonmedical offices in the city to top 115,000 square foot, according to CoStar Group Inc. records.
Laguna Hills’ office market totals about 1.8 million square feet, and buildings have an average vacancy rate of about 15%, above the county average of 10%, according to local brokerage data.
Spectrum Tower is the first Orange County investment—and the first on the West Coast—for Monday Properties, a 20-year-old firm whose office portfolio of nearly a dozen properties is largely in Arlington, Va., just outside Washington, D.C.
In February, the company announced it had opened an office in Los Angeles, its first location on the West Coast, with plans for an acquisition push in the region.
Philip Cyburt, the recently hired managing partner for the region, told the Los Angeles Business Journal, our sister publication, in February that his firm aimed to have about $2 billion of West Coast assets under management in the next five years.
“We remain focused on identifying unique investment opportunities and further expanding our footprint in Southern California,” said Anthony Westreich, founding managing partner.
Monday Properties bought the office from Boston-based TA Realty, which has been selling a number of local properties it bought about 10 years ago as part of a planned disposition strategy.
Terms of the sale were not disclosed, but sources familiar with the transaction put a roughly $27.5 million price tag on the deal, about $243 per square foot.
That’s slightly below the price paid for the nearby Oakbrook Plaza property, which sold last year to an affiliate of New York-based Angelo Gordon & Co. for roughly $250 per square foot.
TA Realty was represented in the sale by Bob Smith and Anthony DeLorenzo with the Newport Beach office of CBRE Group Inc.
Cyburt and colleagues Carl Groner and David Terian represented Monday Properties, which co-invests its own capital alongside partners and investors.
The Spectrum Tower buy “reflects the value proposition Monday Properties is seeking as we pursue good-yielding real estate assets within major infill markets,” Cyburt said.
“South Orange County is one of the most active and healthy real estate markets on the west coast that consists of a diverse, innovative tenant base, above national averages for income and population growth and a high-quality standard of living.”
Next Door Hotel
Spectrum Tower is about a mile north of Laguna Hills’ best-known commercial property, the former Laguna Hills Mall, which is in the early stages of redevelopment into a retail and residential property called Five Lagunas.
Developer Merlone Geier Partners is heading the project, which will turn the indoor mall into a downtown-like environment featuring new retailers, a movie theater complex, a new parking structure and a 350-unit apartment complex.
Other projects in the vicinity include Reata Oakbrook Village, a recently opened, 289-unit apartment development built by Shea Properties and Fritz Duda.
Other developments on the drawing board in the city include a hotel project across the street from Spectrum Tower at 23061 Avenida De La Carlota.
A 76-room, three-story Comfort Inn that opened in 1984 is at the site, but under plans filed with the city it would be knocked down to make way for an 86-room, five-story Hilton Home2 Suites Hotel.
Elite Hospitality Inc. in Laguna Hills is heading the proposed 59,000-square-foot development.
“The Home2 Suites brand is one of Hilton’s extended stay hotels that caters to business and leisure travelers and is considered to be a mid-tier hotel brand,” city filings note.
The project would include a small business center, fitness facilities, 520 square feet of meeting space, an interactive video game room and outdoor amenities, such as a swimming pool and patio, but no space for larger events, such as conferences or weddings.
It would be the first Home2 Suites project for Hilton in Orange County and in all of California, according to Elite Hospitality, which said the hotel type is an eco-friendly brand.
The proposed project was presented to city planners this month.
