IRA Capital’s recent investment focus on refurbished creative offices with headline-making tenants has led the Irvine-based firm to one of the most prominent buildings of its type in the area around John Wayne Airport.
The privately held real estate investor this month said it paid $103 million to buy 2722 Michelson, a nearly 155,000-square-foot building at the busy intersection of Jamboree Road and Michelson Drive, just off the San Diego (405) Freeway.
The building is the current home of Palmer Luckey’s Anduril Industries, one of Orange County’s breakout private companies of late, as well as advertising and media-focused tech company Viant Technology Inc. (Nasdaq: DSP), which went public earlier this year.
The $103 million deal is the most expensive single-building office sale in the airport area of Irvine this year.
At nearly $670 per square foot, it’s also the most paid—on a per-square-foot basis—in over a decade for an Orange County office larger than 150,000 square feet, according to data from real estate market tracker CoStar Group Inc.
Medical Sale
As of earlier this year, IRA Capital was best known locally for its collection of medical-related office properties, including Aliso Viejo’s Element campus, which next year will become the new headquarters for medical device maker Glaukos Corp. (NYSE: GKOS).
In August, the firm announced the $624 million portfolio sale of 29 medical buildings, including Element and a Santa Ana medical building, to Chicago-based Nuveen Real Estate.
Since then, IRA has revamped its investment focus to include newly renovated creative office properties in Southern California.
In October, it paid a reported $153 million for The Post, a recently redeveloped office building in downtown Beverly Hills. It is more than 90% leased to Beverly Hills-based Live Nation Entertainment Inc. (NYSE: LYV), the world’s largest live entertainment company.
IRA paid nearly $1,500 per square foot for the 102,500-square-foot Beverly Hills property.
The company, which also this month paid $42 million for a Long Beach apartment portfolio, said it is “continuing to diversify its real estate portfolio across sectors including healthcare, office, and multifamily.” It plans approximately $1 billion of acquisitions by the end of the year.
LBA Revamp
IRA Capital bought 2722 Michelson from an affiliate of Irvine’s LBA Realty.
The site is catty-corner to Park Place, the sprawling 105-acre mixed-use campus, a large portion of which LBA runs.
LBA bought the 9-acre 2722 Michelson site in 2014 for an undisclosed price.
The building previously served as a manufacturing and office property for apparel company St. John Knits International Inc., which vacated the site about nine years ago.
LBA previously considered a much larger ground-up development on the 9.4-acre parcel, but about four years ago pivoted to a creative office project for the site, which is located at the busiest intersection in the city for traffic.
It landed Anduril as its main tenant in 2018.
“Anduril is one of the most impressive companies at the forefront of defense and technology, and we are pleased to have them as a new tenant in our portfolio,” said IRA Capital co-founder Samir Patel.
Patel suggested future changes at the property are possible.
“Given the high-profile IBC location and underutilized 9-acre land parcel, IRA Capital is excited about the long-term potential for the site,” he said.
The site is next to an empty 6-acre site along Jamboree Road that was recently bought by industrial developer Black Creek Group, for $38.7 million. See the Dec. 6 print edition of the Business Journal for more on that transaction and development plans for the site.
Viant Re-Ups, Expands
Anduril won’t be a long-term tenant at the Irvine building.
The growth-stage defense contractor, just a few years into its operations but already valued at around $5 billion, announced plans earlier this year to move to a much larger creative office campus in Costa Mesa.
That site, dubbed The Press, will ultimately run over 650,000 square feet. Anduril earlier this month began moving into the Costa Mesa facility in phases.
It is reported to have a long-term lease at 2722 Michelson and had been subleasing out a portion of the building to Viant.
Viant’s initial lease was due to expire next year, but the company said in recent regulatory filings that it entered into an amendment for the property, extending the term of the lease to May 2031.
It wasn’t specified whether Viant is continuing to sublease from Anduril, or will now lease the space directly from the landlord.
The new lease increases the rentable square footage to 55,596 square feet from 47,733 square feet, according to Viant. As of September 30, “the future minimum payments related to this lease totaled approximately $26.5 million,” the company said in its last quarterly earnings report.
Super73’s New Home
Along with Viant, Irvine-based electric motorbike company Super73 is taking over space at 2722 Michelson that Anduril will be vacating.
The Business Journal in October was first to report that the fast-growing company, whose bikes are an eco-friendly mashup of a dirt bike and motorcycle, would be moving into about 70,000 square feet of space at the Irvine building over the next year or so.
Super73 doesn’t disclose sales figures, but said its revenue doubled in 2020, and expects to double revenue again this year.
The company got its start in an approximately 8,000-square-foot space in Tustin and relocated to a 15,500-square-foot Irvine facility in 2019.
After the banner year in 2020, “we needed to look for a new home very quickly,” Michael Cannavo, co-founder and chief marketing officer of Super73, told the Business Journal in October.
