Newport Beach-based real estate investor and developer Olen Properties Corp. has made its largest local purchase in several years with a $73.5 million cash buy of a 16-building office park in the Irvine Spectrum.
Olen last week completed the acquisition of Irvine Oaks Executive Park from an affiliate of JPMorgan Chase & Co. in New York.
The 21-acre complex is at Alton Parkway and Laguna Canyon Road, across the street from the three-building, gated headquarters of online gaming company Blizzard Entertainment Inc.
Blizzard, which renewed its lease for its headquarters late last year, also has a sizable presence at Irvine Oaks, where it leases about half of the 322,000 square feet in the park and has plans to expand further.
The entire 16-building complex is about 92% leased.
The Irvine Oaks sale is among the largest office deals in Orange County so far this year.
It trails only an $85 million deal for a Seal Beach complex that traded hands in February, in terms of price for an individual office property sale here.
The Irvine Oaks buy also marks a return to pricier office acquisitions in OC for Olen, the county’s second-largest commercial property owner behind Newport Beach-based Irvine Company.
Olen owns some 7.5 million square feet of office and industrial space, much of it in OC.
Olen is not known to have directly purchased any larger local buildings in the past four or five years besides a $24.5 million purchase of a Santa Ana office park last year and a smaller deal in Mission Viejo in 2011.
The company had been investing its money by funding mortgages for other real estate owners. Olen is said to have made nearly $250 million in third-party mortgages over the past year or so, funding office deals in OC and L.A., as well as a hotel property in Chicago, among other transactions.
The opportunity to buy Irvine Oaks—believed to be the largest office park in the Spectrum not owned by Irvine Co.—was too good to pass up, according to Igor Olenicoff, Olen’s president.
He credited his daughter, Natalia Ostensen, the company’s vice president, for taking the lead on negotiations for Irvine Oaks.
“We are quite pleased with this acquisition and feel that we were able to buy it at a very fair price with significant upside on a long- term hold,” said Igor Olenicoff, who the Business Journal last week reported to be OC’s second-wealthiest resident, with a $3 billion estimated fortune.
Olen was also assisted in the valuation and bidding process by Don Curtis, who is with the Irvine office of brokerage and investment advisory firm Holliday Fenoglio Fowler LP.
The property got heavy interest from REITs, pension fund advisers, and other national institutional investors, as well as local investors, according to Jeff Cole, executive director with the Irvine office of Cushman & Wakefield Inc.
Cole represented the sellers in the deal, along with colleagues John Gallivan, Ed Hernandez and Don Yahn.
Interested buyers “didn’t just see what the site was but what the site could be,” Cole said. “We’re talking about a ‘creative space environment’ that has potential to attract the sort of tenants you’re used to seeing in Silicon Valley to South Orange County.”
The property’s location, tenant base, and office design provide the new owners plenty of upside, according to Yahn, a senior director at Cushman who has handled leasing at Irvine Oaks for the past five years.
The property, near the San Diego (405) Freeway, is one of the largest office parks on the western edge of the Irvine Spectrum, and that’s appealing to tenants looking to be closer to the area around John Wayne Airport.
The complex also has its share of space that can be reconfigured to attract users of creative-office space, Yahn said.
Among those types of tenants is Newport Beach-based homebuilder William Lyon Homes, which recently inked a nearly 10,000-square-foot lease at Irvine Oaks.
The space will be used as a new home showroom for the company, which has several residential developments under way in the area.
Irvine Oaks brings in about $4 million in rents annually, according to marketing material for the property.
Rents for new deals at the complex are up nearly 25% from a year ago, Yahn said.
“Rents have been progressively going upward,” he said.
“We’ve seen a trend of companies looking for and willing to pay for creative-work spaces,” Cole added.
The one- and two-story buildings at the complex range from about 6,250 square feet to nearly 59,000 square feet.
Other large tenants at the campus include MaxLinear Inc., a semiconductor company; RAI Care Centers of California, a kidney dialysis company; and the Irvine Center for Early Childhood.
