Orange City Square, a four-building office complex off the Garden Grove (22) Freeway in Orange that traded hands for a reported $63.5 million in 2010, is going back on the market at a much higher price.
CBRE Global Investors—an investment unit of L.A.-based brokerage CBRE Group Inc. that took over the 386,000-square-foot complex in late 2010—recently put the Central Orange County office property on the market. This time around, a sale could fetch $85 million or more.
That level of pricing would put a sale in the $225-per-square-foot range, more than $60 per square foot than what Orange City Square last sold for.
Brokers for the Newport Beach office of CBRE Group, who have the listing for the complex, said improving market conditions, a lack of other office assets trading in Central OC, and improvements to Orange City Square’s property and tenant base justify the higher pricing.
“Capital today is competing for well-leased, stable assets with limited rollover in core markets like Orange County,” said Paul Jones, a vice president for CBRE’s investment property group.
Orange City Square was about 60% leased at the time of the 2010 sale. Now the complex is closer to 88% occupied.
Tenants at the complex include Liberty Mutual, Access Insurance, Pediatrix Medical Group, Department of Motor Vehicles, Binder & Binder and Zenith National Insurance.
Orange City Square is located on a 14-acre site that runs along The City Drive South, just south of The Outlets at Orange shopping center. The complex includes three mid-rise office buildings totaling 373,619 square feet.
A fourth building counts 12,392 square feet of small retail tenants.
CBRE Global Investors, since taking over the property in 2010, said it implemented a capital improvement program that included adding environmentally friendly features to the property and new amenities for tenants, in addition to undertaking a rebranding campaign.
Price Swings
The value of Orange City Square has seen some wild swings over the course of the past five years.
A venture between Birtcher Anderson Realty LLC in San Juan Capistrano and Fairfield, Conn.-based General Electric Co.’s GE Asset Management reportedly paid close to $130 million for Orange City Square in September 2007, near the peak of the last commercial real estate boom.
The complex was the most expensive stand-alone office complex in Orange County to sell in 2007.
CBRE Global Investors took over the property in 2010, after buying a nonperforming mortgage note that was tied to Orange City Square and subsequently foreclosing on the complex.
The property was acquired through the CBRE Strategic Partners U.S. Opportunity 5 fund, a commingled private equity real estate fund sponsored by CBRE Global Investors and raised from institutional investors in the United States, Europe and the Middle East.
Notable Sales
Central OC’s office market has seen few notable sales since the last time Orange City Square traded hands in 2010.
The priciest sale seen in the area so far this year is the 273,000-square-foot Stadium Gateway office at 1900 S. State College Blvd.
Beverly Hills-based real estate investor Kennedy Wilson last month paid $56 million for the property, one of several buildings in the area previously owned by Los Angeles-based MPG Office Trust Inc.
Former MPG Buildings
Other former MPG buildings in the area still rumored to be on the market include the 282,000-square-foot 500 Orange Tower building on North State College Boulevard. That building is operating under receivership.
“Given the lack of available product in Orange County over the last several months, there is pent-up demand for this market, which continues to show steady improvement in fundamentals,” said CBRE’s Jones.
Jones is working with colleagues Bob Smith, Karen Scholte and Rickey Warner to market the property.
