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Wednesday, Feb 21, 2024

IRA Pays $102M For Irvine Office Campus

New uses eyed for 24-acre VKCC site

Irvine-based IRA Capital LLC has spent more than $100 million to acquire the VKCC creative office campus in its hometown, with potential long-term plans to redevelop the site that’s a few miles from John Wayne Airport into alternative uses, the Business Journal has learned.

The commercial real estate investor, which has made a string of large healthcare and medical office purchases in recent years, paid about $102.4 million for the nine-building office park that spans almost 450,000 square feet near the intersection of Von Karman Avenue and Alton Parkway.

EQ Office—previously known as Equity Office—sold the 24-acre site for about $230 per square foot, or $90 per land foot, real estate sources tell the Business Journal.

The deal is among the largest office sales in Orange County over the past year

“The value of this property is in the land,” IRA co-founder and Principal Amer Kasm told the Business Journal. “It’s rare to come across a contiguous parcel of this size in Irvine. We saw the opportunity to reposition it in the long-term into its highest and best use.”

IRA is exploring several new uses for the site, such as lifescience and multifamily, but the short-term goal is to “continue to own and operate the asset as is and make sure existing tenants are happy.”

“It’s a long-term play for us,” Kasm said.

Healthcare Outperforms

EQ Office, a subsidiary of New York investment firm Blackstone, acquired VKCC as part of a portfolio deal in 2015, and kicked off a creative office conversion for the low-rise campus two years later.

The site includes wellness and fitness components, concierge services and various food and beverage options among other amenities.

The project was about 60% leased at the time of sale with large tenants including Westcliff University and Consumer Direct.

A drop in demand for the office sector from investors and tenants alike in the wake of the pandemic has prompted a surge in conversion and redevelopment projects across the region.

IRA is no different, with new plans for once-popular creative office projects across its portfolio.

“The office market has been hit significantly, and many are questioning the long-term viability,” Kasm said. “There’s a tremendous opportunity to look at sites where there’s a higher need than traditional office.”

IRA counts a portfolio of about 8 million square feet; nearly 70% of that is comprised of healthcare and medical offices, with the balance made up of traditional office, retail and multifamily.

“Our entire healthcare portfolio is close to 99% leased, which speaks to how strong the sector is,” Kasm said.

As such, healthcare is a top product type option for VKCC, though the firm is also bullish on lifescience, multifamily and industrial.

Ex-Anduril Site

The purchase comes a little more than a year after IRA purchased Anduril Industries’ former headquarters in Irvine for $103 million. The nearly 155,000-square-foot building at 2722 Michelson is about 2 miles from VKCC.

Anduril relocated last year to its new, larger base at The Press in Costa Mesa; the Irvine building is now occupied by advertising and media-focused tech company Viant Technology Inc. (Nasdaq: DSP) and electric motorbike company Super73.

IRA is in the early stages of redeveloping the office, at the busy intersection of Jamboree Road and Michelson, into a mixed-use site involving multifamily and other components.

“The corner lends itself well to residential and mixed-use components,” Kasm said.

Across the street, Miami-based homebuilder Lennar is nearing completion on a 285-unit residential project at its Central Park West development; and a 6-acre parcel next door is making way for a 137,000-square-foot industrial project headed by Black Creek Group.

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