A big chunk of apartment construction and a new office tower could go up on land next to the Outlets at Orange following the recent sale of two nearby buildings.
Irvine-based real estate investor and developer Greenlaw Partners late last month completed the purchase of the City Parkway Collection office portfolio at 500 and 600 City Parkway W.
The Orange offices total 269,395 square feet and sold for about $45.5 million, or $169 per square foot.
The Abbey Co., a Long Beach-based real estate investor that bought the properties in 2009 as part of a larger portfolio, sold them to Greenlaw and its financial partner in the deal, Chicago-based Walton Street Capital LLC.
The 10-story 600 City Parkway office and the four-story 500 City Parkway office sit on 7.9 acres between the Outlets at Orange and the Christ Cathedral campus.
The buildings are about 83% leased, according to brokers with the Newport Beach office of CBRE Group Inc., whose Institutional Properties and Investment Properties groups worked on the sale.
Third Deal
The purchase is the third office deal for Greenlaw on land to the immediate west of the Outlets at Orange, a 757,000-square-foot mall just off the Garden Grove (22) Freeway that’s Orange County’s ninth largest shopping center by sales.
Last year, Greenlaw and Walton Street paid about $56 million for City Plaza, a 19-story office that holds a bulk of the operations of CashCall Inc., the Anaheim-based mortgage and consumer lender.
The 334,000-square-foot building, one of the larger and most prominent offices in Central Orange County, is now nearly fully leased, according to Greenlaw officials.
Greenlaw also owns the 4000 Metropolitan office about a block west of City Plaza. The 183,000-square-foot building is nearly full, and tenants include the FBI. Greenlaw paid a little less than $12 million in 2010 for the building, which was largely empty at the time.
It now owns all of the major commercial buildings on the western edge of the shopping center, except for an LA Fitness gym and a 10-story office owned by CalOptima, a county agency that provides healthcare coverage for children, the poor and people with disabilities.
Greenlaw holds about 786,000 square feet of office space in the immediate area, and there’s plenty of room for development on the investor’s land surrounding those buildings that’s currently used for surface parking, according to Wil Smith, principal at Greenlaw.
The company is exploring multifamily development for at least part of the property, which the city has zoned for “high-intensity retail, office, and housing development,” allowing development of as much as 60 apartment units per acre.
The investor’s area land appears to be large enough for 800 or more apartments if Greenlaw sticks with multifamily development only.
The company also has space to build a 20-story, 360,000-square-foot office on land next to the City Plaza tower, but that possibility would depend on user demand, Smith said.
Rents are rising in Central OC’s office market and not too far behind those in the area around John Wayne Airport, he said.
“The Central Orange County market fundamentals continue to improve,” said Paul Jones, first vice president with CBRE who worked on the deal with colleagues Kevin Shannon, Ken White, Scott Schumacher, Bob Smith, Blake Bokosky, Gary Stache, Pat Scruggs and Anthony DeLorenzo.
Greenlaw hasn’t disclosed a time frame for any apartment or office development. By next year, it said it will start work on a multilevel parking structure on its land, which would free up space for either the apartments or the office tower, Smith said.
New apartments within walking distance of the shopping center and office jobs would make any multifamily development there one of Central OC’s most attractive rental properties, said Smith, whose company has been involved in nearly $200 million in acquisitions this year.
A 334-unit complex being developed by Chicago-based AMLI Residential is going up on a 5.6-acre site next to the Doubletree Hotel, on the northeastern edge of the Outlets at Orange.
Second Try
Greenlaw’s Orange plans are its second try at apartment development in the immediate area in recent years.
In 2011, it bid $46 million for Crystal Cathedral Ministries’ iconic glass church, surrounding office buildings, and land across the street from its latest Orange purchase, all in Garden Grove next to the city line.
A plan to build about 400 apartments on part of the campus was part of the bid, but the effort was eventually bested by the Roman Catholic Diocese of Orange, which now operates the campus under the Christ Cathedral name.
