A 110,400-square-foot Spectrum-area office building eyed for medical uses has traded hands for $43 million, with redevelopment plans already in the works.
San Ramon-based Meridian, a medical-focused real estate developer and owner with significant Newport Beach operations, paid nearly $390 per square foot for the four-story office at 114 Pacifica in a venture with investment partner Harrison Street of Chicago.
By price, it’s among the top three office sales in Orange County since the onset of the pandemic-driven recession; all three of those sales were in the Spectrum submarket, where office vacancy rates currently run about 14% following a wave of new development coming online.
The building—near the intersection of Barranca Parkway and Irvine Center Drive—was sold by an affiliate of New York-based BlackRock Inc., which paid about $42 million for the office in 2006, property records indicate.
Medical Focus
The new owners said they will convert the 21-year-old Pacifica Court building into a Class A medical office; its new name will be Pacifica Medical Plaza once construction wraps by the third quarter 2021.
The building is on a 4.8-acre parcel alongside the 133 Freeway—the headquarters of device maker Masimo Corp. sits on the opposite side of the 133—with future tenants benefitting from the nearby “Orange County Great Park and the recently announced $1 billion City of Hope Cancer Center,” according to Meridian Vice President of Acquisitions R.J. Sommerdyke.
City of Hope’s new campus was purchased in May for $108 million, factoring in existing buildings and excess land for development.
“In addition to being one of the fastest-growing cities in the state, Irvine has one of the tightest medical office markets in Southern California with extremely high barriers to entry and very strong demographics,” Sommerdyke said.
CBRE Executive Vice Presidents Anthony DeLorenzo and Todd Tydlaska represented the seller in the just-completed deal; Meridian and Harrison Street were self-represented.
The deal marks the third venture between the two companies.
Tenancy, Investment Plans
Pacifica Court was 60% occupied at the time of sale to a mix of tenants including STV Inc., Ledcor Group and Keystone Capital Markets, according to CoStar Group records.
The sale follows a nearly one-year long entitlement process for Meridian, which plans on building a new three-level parking structure that will add about 165 additional spaces, as well as a new lobby, common areas and upgraded building systems to accommodate medical office uses.
“The need for top-tier, modern healthcare facilities and medical office buildings has never been greater,” said Mark Burkemper, a senior managing director at Harrison Street.
“The conversion of this building to medical office will allow providers to serve a broad range of patients in an environment that can provide the best care available,” said Merdian CEO John Pollock.
John Wadsworth and Aaron Phillips from Colliers’ Irvine office will handle leasing efforts, and are targeting large healthcare systems and users.
The building can accommodate a variety of medical uses, Meridian said, including surgery centers and imaging clinics.
“These large blocks of space are rarely available in Irvine and are in high demand from medical providers that are looking to grow or consolidate space near their patients,” Sommerdyke said.
Local Footprint
The project marks the third local project for Meridian; its counts a local portfolio topping 220,000 square feet.
It is currently investing north of $5 million in upgrades at a 53,500-square-foot office it purchased last year along Sunflower Avenue in Santa Ana for $20.4 million. The building, near the SOCO shopping center and The Press creative office development site, was originally a culinary and arts school that is now in the process of becoming a patient-centric medical facility.
Meridian also owns The Laguna, a 57,000-square-foot medical office building in Laguna Hills, next to Saddleback Medical Center.
Companywide, it has approximately 500,000 square feet currently in development, and a pipeline north of 500,000 square feet in the works.
Meridian said it plans on pursuing “similar, well-located opportunities in tight submarkets across the Western United States” like the recent Irvine deal, with Orange County a “high priority market.”
Meridian’s purchase of the Pacifica Court office is the second notable deal in recent months for the street.
In July, Toda America, the U.S. division of Japanese construction firm Toda Corp., made its first local investment with the $26.2 million buy of 111 Pacifica, a 68,500-square-foot office across the street from the Meridian property. It sold for about $382 per square feet.
