Last year, the City of Irvine commissioned CBRE to conduct an appraisal of vacant, developable land in the area around John Wayne Airport known as the IBC, or Irvine Business Complex.
The brokerage’s value of such property: $4.2M an acre, with industrial development representing the highest and best use for the IBC land. That estimated value was down from an all-time high of $4.7M an acre, set in 2023, according to CBRE.
It’s unclear if city staff, or Irvine’s city council, took much time to read the report, given the terms of a deal the city this month agreed to with the owners of the nine-building Von Karman Corporate Center office complex, also known as VKCC.
The 25.4-acre, low-rise complex, which sits in the IBC amid a stretch of older offices, warehouses and a shopping center anchored by a Walmart along Von Karman Avenue near Alton Parkway, was being eyed by its owners for a redevelopment headlined by a new, 540,000-square-foot industrial building.
That project was approved last year but subsequently reevaluated by city council members who preferred more housing in the area.
Attempts at forcing housing development upon the project’s owners, among other issues, raised the threat of litigation. That led to one of the most expensive land deals struck in OC of late: Irvine now has the option to buy the land from the current owners, to facilitate residential development.
The cost of that agreement: $12.5M an acre, an unheard-of price for larger land sites anywhere in Irvine, and nearly three times the value CBRE placed on the IBC land.
That price, equating to $317.5M for the entire property, was “established based on underwriting assumptions for a fully constructed and stabilized industrial project,” a city filing said.
The per-acre price also stands “on the upper end” of fair market value for residential land deals in Irvine, City Manager Oliver Chi told the OC Register. That’s an understatement.
VKCC is backed by a venture between Irvine’s IRA Capital and Boston-based investor Foxfield LLC. The owners paid a reported $102.4M for the office campus in 2023.
Between the potential $317.5M buy of the VKCC office campus and last year’s head-scratching decision to spend over $100M on a new indoor badminton facility, and every Irvine resident now has the potential to be on the hook for over $1,300 for a pair of clearly overpriced properties in the IBC.
Mayor Larry Agran stated in city hearings last year his willingness for the city to buy more real estate, given rising prices and a lack of available inventory in Irvine.
Given the city’s negotiating acumen of late, local real estate owners are likely lining up at city hall to make additional deals.
Famed aerospace engineer and physicist Theodore von Kármán’s influence in OC extends beyond street names: see Kevin Costelloe’s page one story for more on the IPO of Karman Space & Defense (NYSE: KRMN), a maker of systems for defense and space missions, which now counts a valuation near $4B.
