An office condominium project is on the verge of completion in downtown Costa Mesa, where businesses would be able to buy a unit for their corporate operations.
Cameron Hildreth of Long Beach-based Hilco Development Services told the Business Journal that his two-level, 10-unit office condominium project at 200 E. Baker St. in Costa Mesa – called The Orwell – is set to come online in March.
The construction company spent more than $24 million on the project, including $15.3 million for the property.
The developer, the winning bidder for the iconic Ziggurat building in Laguna Niguel, said the office market continuing to be rough during the past few years means interest in smaller spaces such as commercial condominiums are in higher demand.
“The impacts from COVID on U.S. work culture have made small- and medium-sized firms reevaluate the space needed for their offices. We’ve found that business owners with hybrid or remote teams are looking for smaller space and many seem to be leaving the large office properties with increasing vacancy rates,” Hildreth told the Business Journal. “Opting for the benefits of ownership in key markets like Costa Mesa.”
Businesses looking into buying office condominium (see story this page) units include family businesses and boutique law firms, among others.
The condominiums range in size from 2,000 to 12,000 square feet and cost between $1.6 million and $8.7 million to purchase. Shared amenities at the condominium building include a package room for deliveries and common spaces for networking.
“Each suite provides essential amenities, including fully equipped kitchens, dedicated IT closets, individual electrical submeters and welcoming reception desks,” according to CoStar.
The building’s total size is 43,500 square feet and sits on 2.15 acres, per CoStar. Hilco invested $9 million in the project. Hildreth said the building’s entire interior was removed and redone, and the exterior received new landscaping.
The project’s partners were Hilco Development Services as developer and contractor, Anthony Freasier and Jeff Hakim as brokers, BLC Prime Lending as lender, Cory Walker of Walks Studios as architect, Plump Engineering as mechanical, electrical, plumbing engineer and Regal Structural Group as structural engineer.
Owning an office condominium unit gives the buyer greater control over their space, as opposed to leasing, according to Freasier.
Hilco Development bought the property at 200 E. Baker St. from First Washington Realty in March 2023. First Washington Realty acquired the property from Donahue Schriber, a Western U.S. operator of shopping centers.
Last year, Hildreth and his partner Jeff Pintar of Pintar Investment Co. won the dramatic back-and-forth auction for the Chet Holifield Federal Building, known as the Ziggurat, with a bid of $177 million.
What is an Office Condo?
An office condominium, according to Carr, a commercial real estate services provider for healthcare tenants, is a small space, usually measuring a few thousand square feet – usually something much smaller than companies such as Apple or Google might lease.
These small units are attractive to independent and boutique companies seeking to own their own space and not lease something in a larger commercial structure.
Bloomberg, in 2022, reported on the office condominium market and said the alternative form of real estate would be attractive to employers seeking office space without having to pay high lease prices. Office condominiums, per Bloomberg, would be attractive to solo entrepreneurs, low-headcount companies and small legal or medical practices.
The Society of Industrial and Office Realtors (SIOR) recently cited office condominiums as “a solution amidst sector reimagination.”
“The condo model is an option that is helping absorb unused or unneeded office space, and it brings benefits to tenants, as well as has advantages for landlords,” according to a SIOR blog on the industry trend.
Office condominiums found their initial footing in small markets, where companies sought to own, as opposed to lease, their spaces.
