China’s entry in the market of commercial jet manufacturing has bought one of the better-known offices in the Koll Center Newport Beach business park.
Commercial Aircraft Corporation of China Ltd., which operates under the Comac name, recently closed on the purchase of 4350 Von Karman Ave., a 68,425-square-foot office in Newport Beach about a mile from John Wayne Airport.
The four-story building Comac acquired—which is located across the street from the Pacific Club—traded hands for a little less than $19.9 million, or about $290 per square foot, in an all-cash deal.
An affiliate of Newport Beach-based MIG Real Estate LLC sold the office in a deal brokered by the Irvine office of Jones Lang LaSalle.
Shanghai-based Comac was established in 2007 by China’s State Council, with a goal of competing on a global basis with Chicago-based Boeing Co. and European Aeronautic Defence and Space Co.’s Airbus subsidiary in France.
Comac has reportedly gotten more than $7 billion in startup funding to help break into that duopoly. Among its backers are a number of state-owned enterprises, including Shanghai Guosheng; Aviation Industry Corporation of China (Avic); China Aluminum Corp. (Chinalco); Baosteel Group; and Sinochem Group.
Local Profile
Comac’s buy in Newport Beach gives it a high-profile location in a local aerospace industry that ranges from Boeing operations and various suppliers spread along the coast and throughout North OC to a field of in-flight entertainment specialists clustered in the Irvine Spectrum and Lake Forest.
“They wanted a Newport Beach address,” said Steve Economos, executive vice president for Jones Lang LaSalle, who marketed the building for sale along with colleague Geoff DeWolf.
It has not been disclosed what use Comac—which opened its first U.S. office in Los Angeles two years ago—has in mind for the Newport Beach office, where the tenant roster includes LNR, Public Agency Retirement Services, and iStar Financial as tenants.
Comac intends to occupy the top floor of the building, which is currently configured to hold about 50 people.
The company and its representatives could not be reached for further comment last week.
Comac’s Los Angeles office opened in late 2010, part of what was described as an effort to “better promote communication [with] government agencies including the Federal Aviation Administration.”
The Los Angeles office was also seen as “favorable for strengthening cooperation with suppliers” of components for its flagship program, the 158-seat C919 airliner, according to the company.
The C919 is expected to see have first flight at the end of 2015 and reach customers in 2017 or 2018.
Orders
Comac has taken orders for an estimated 400 of the planes, including 20 to the finance leasing unit of Industrial Bank Co. in China and another 50 to the aircraft financing arm of Stamford, Conn.-based General Electric Co. and two Chinese airlines.
Comac has indicated that after the initial ramp-up period, it expects to produce more than 100 C919s annually in Shanghai.
Prices are expected to run in the $70 million range per plane, according to aerospace trade reports.
Boeing last week racked up $100 billion in sales of its new 777X, which holds more than twice the number of passengers as the C919 at a list price of $350 million to $377 million.
The C919 follows development of a smaller, regional jet by Comac dubbed the ARJ-21. The inaugural ARJ-21 came off the production line in 2007 and took flight a year later, but it is still in the process of being certified and now expected to be delivered to customers sometime in 2014.
Chinese Buyers
Comac’s move to acquire office space in Orange County is one of the largest commercial property purchases here by a China-based investor in the past two years.
Investor groups with ties to China bought a handful of notable offices in the region in 2011—spending close to $100 million for large buildings in the Irvine Spectrum and the South Coast Metro area, among other deals—but have made few large purchases since then.
Foreign buyers in general have remained quiet on the local investment front this year, as Wall Street-backed institutional investors have snapped up a majority of the local larger offices that have come to market.
The space Comac will occupy previously held operations of seller MIG Real Estate and its affiliates. The company, now based in Newport Center, also goes by the name Merage Investment Group Real Estate and is the real estate arm of investment firm MIG Capital.
Paul Merage, creator of Hot Pockets and a University of California, Irvine, benefactor, is MIG Capital’s chairman.
