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OC Office Sales Pass $400 Million Mark in First Quarter

The recent $129 million sale of the Griffin Towers office complex in Santa Ana capped off a memorable period for big-dollar office sales in Orange County.

Nearly $1.3 billion in larger office sales, or individual properties trading hands for more than $10 million, were completed here over the past year, according to data from the Newport Beach office of CBRE Group Inc.

That’s the first time the $1 billion mark has been passed here since 2007, according to CBRE First Vice President Paul Jones.

2007 marked the height of the last commercial real estate boom, but continued interest from pension funds, private equity firms, and other institutional investors in Orange County’s recovering office market means that more trading should be on the way this year, Jones said.

“We’re feeling good about the year.”

Jones said one of the country’s most active investors, which he wouldn’t name, has targeted OC as the No. 1 growth market in the country over the next three to five years in terms of rental appreciation and higher valuations of buildings.

Deal-making has taken place in a variety of local markets so far this year. The 18301 Von Karman office tower in Irvine sold for about $69 million in the largest airport-area transaction of the first quarter. The South Coast Metro area saw several transactions, as did Central OC.

Some larger deals in the airport area are expected to come to market in the second quarter, as well as closings of notable deals in Brea and other cities, said Jones, who was part of the brokerage team that worked on the sale of Griffin Towers, the largest commercial office transaction in OC so far this year.

Dallas-based Lincoln Property Co. and private equity partner Angelo, Gordon & Co. in New York sold the two-building complex in the MacArthur Place development that holds the headquarters of Corinthian Colleges to the office division of private equity giant Blackstone.

The sale’s closing was announced April 8, but it occurred in late March, according to Jones, who worked with colleagues Kevin Shannon, Bob Smith and Ken White on the deal.

The Business Journal reported on the impending sale in early March.

Tenants at Griffin Towers also include CH2M Hill, Ultimate Software and Premier Business Centers.

Lincoln Property and Angelo, Gordon & Co. bought the complex in March 2010 for about $90 million when it was 71% leased. It’s now 88% occupied.

“We identified a trophy asset in financial distress, invested energy and capital into alleviating deferred maintenance, and took a hands-on approach to improving occupancy in a challenging leasing environment,” said Kevin Hayes, senior vice president at Lincoln Property.

Back to School

Newport Beach-based MIG Real Estate has picked up a 510-unit apartment complex next to the campus of Arizona State University in Tempe, Ariz.

Quadrangles Village sold for about $42 million, or $82,000 per unit, according to local reports.

It has 23 three-story buildings with studio, one- and two-bedroom floor plans and was built in 1987. It brings in about $5.5 million in rents annually, according to marketing materials.

It is MIG’s second apartment investment in Arizona. Last year, the real estate investor paid nearly $40 million for Acacia Creek, a 508-unit complex in Scottsdale.

The company said it has bought nearly 7 million square feet of property valued at nearly $1 billion over the past five years.

Steadfast

A fund managed by Irvine-based Steadfast Cos. has bought a pair of apartment complexes, in Dallas and Chattanooga, Tenn., for a combined $42 million.

The company’s Steadfast Income REIT Inc. paid $18.9 million for Reserve at Creekside Village, 192-unit complex in Chattanooga that’s 10 years old and 91% leased.

It also paid $23.3 million for Mapleshade Park in Dallas. The class A, garden-style community has 148 units and is 96% leased.

“These assets are consistent with our philosophy of acquiring stable, income-producing properties in strong growth markets where we see opportunity to enhance operational efficiencies and maximize overall value,” said Ella Shaw Neyland, president of Steadfast Income REIT.

The nontraded REIT now owns 65 communities in 11 Midwestern and Southern states, with a portfolio totaling about 16,300 apartments.

Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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