Gardena-based Overton Moore Properties, developer of Orange County’s biggest industrial park during the last commercial boom, has its sights set on ramping up sales at one of the area’s largest industrial condominium projects.
The developer recently took ownership of 28 unsold industrial condo units at Las Palmas Business Park, a 48-unit, 230,289-square-foot project located at McFadden Avenue and Lyon Street in Santa Ana. The site, located less than a mile from the from the Costa Mesa (55) Freeway, was once known as the Electric Farms for its proximity to a power station.
Overton Moore said it bought a note from Bank of America secured by the unsold industrial condominium units at the 11-building Las Palmas project. The company said it closed the acquisition less than five days after signing the loan-purchase contract.
Terms of the transaction weren’t disclosed. The loan, said to have a face value below $20 million, is believed to have traded hands for less than 80 cents on the dollar, according to brokerage sources.
The note sale is among the larger industrial transactions seen in OC this year, though it doesn’t appear to be the most expensive sale on that stretch of McFadden Avenue. Newport Beach-based Olen Properties paid a reported $24.5 million this year for McFadden Centre, an 184,737-square-foot business park on the opposite corner as the Las Palmas project.
The Las Palmas acquisition is the first in Orange County for Overton Moore since it wrapped up work at its Pacific Gateway Business Center, a 10-building, 830,000 square foot industrial park it built in Seal Beach on land once owned by Chicago-based Boeing Co.
The Seal Beach project is the largest industrial development seen in OC in nearly a decade.
The Pacific Gateway project sold out in late 2010, and counts a number of big tenants, including Seattle-based drug developer Dendreon Corp., which occupies an 184,000 square feet building there.
Overton Moore is eyeing much smaller users for Las Palmas, where condos range in size from 2,500 to 15,640 square feet.
The pricing on the Las Palmas transaction will allow the new owner to offer competitive prices for the remaining 28 units at the project, according to Jason Hines, Overton Moore vice president.
Lease Rates
Marketing materials show buildings offered for sale by Overton Moore ranging from $182 per square foot for smaller units to about $135 per square foot for larger condos.
Units were expected to sell at prices closer to $250 per square foot when the project last traded hands in 2007, at what turned out to be the peak of the local commercial real estate market.
Gillett Commercial Real Estate Services, which has a brokerage and property management office at Las Palmas, will continue to market and sell the units on behalf of Overton Moore
The property previously sold about five years ago, when Newport Beach-based Master Development Corp. and other investors paid a reported $30.5 million, or about $130 per square foot, for the then for-lease business park.
Renovations
Another $4 million or so of renovations were spent converting the site into for-sale units for small business owners.
The Las Palmas development was billed as Orange County’s largest-ever industrial condominium conversion at the time of its 2007 sale.
Competition from other for-sale condo projects across the county—not to mention a slumping economy and down real estate market—soon slowed down the pace of sales at the Santa Ana project.
The project’s prior owners turned to online auctions to sell off a handful of units, while also leasing out some empty space on short-term deals. Overton Moore isn’t planning to lease out any of the remaining units at Las Palmas and is focusing on selling condos to individual owner-users, Hines said.
The company said it will consider selling free-standing buildings as multi-tenant leased investments.
