After years of buying up properties in the largest city of central Orange County, TGS Management Co. LLC—a secretive quantitative finance hedge fund—has traded a pair of its offices in the city for a combined $60 million.
TGS, which is led by local billionaire C. Frederick Taylor, sold the two properties at 1 and 3 Banting to Chicago-based industrial investment management firm and operator Bridge Industrial. Taylor, whose net worth tops $3.6 billion, is No. 18 on this year’s OC’s Wealthiest list.
TGS already has plans to convert the apparently vacant offices into a warehouse. It’s unclear when Bridge will begin construction on the project, which sits on a 12-acre lot near the San Diego (405) Freeway and the Laguna (133) Freeway junction, the Santa Ana (5) Freeway and outdoor mall Irvine Spectrum Center.
Bridge did not respond to requests for comment.
If the company proceeds with TGS’ existing conversion plans, the project would be among the largest office-to-industrial conversions for the Spectrum area of Irvine, an area that’s seen the largest amount of new office development in Orange County over the past decade.
Office-to-industrial conversions have become increasingly popular in OC and across the country, due to return-to-work trends and the rise of e-commerce since the pandemic.
As a result, industrial facilities in the region have seen high demand over the past few years.
OC’s industrial market boasts the lowest vacancy rates and highest rents in all of Southern California, according to JLL.
However, the region’s “fundamentals are softening,” the JLL report said.
Total vacancy in OC rose from less than 3% in 2023 to 4.6% in the second quarter. The average asking rent per square foot was $1.62, down from $1.65 from the quarter prior.
$50M Office Buy
TGS acquired 1 and 3 Banting for $49.6 million in 2021. The deal at the time worked out to about $360 per square foot.
The company bought the property from Cal State University, Fullerton, which closed its operations on the Irvine campus after a short-term leaseback on one of the buildings.
The campus’ closure marked the end of the university’s physical presence in South OC after nearly three decades.
There’s been no indication that TGS has used the property since it was acquired.
1 and 3 Banting were built in 1970 and 2005, respectively, according to data from real estate tracker CoStar Group Inc.
Irvine Industrial Projects
The Banting buildings are one of several new industrial projects on the docket in Irvine, which has recently seen a major revival for the product type after decades of little to no significant development.
Plans for about 2 million square feet of larger-sized projects are either under construction or in the works in the city, brokerage data and city records indicate. The projects include a mix of new development on unused land, and the conversion of outdated properties into new warehouse and distribution facilities.
Most of the conversion projects in the city are taking place closer to John Wayne Airport.
The city’s taken note of the rising interest in the property type, last year saying that over “the past approximate 18 months, staff has noticed many more inquiries about these types of uses than at any time in the past 10 to 15 years.”
Another office-to-industrial conversion in the city is Inwood Park, a roughly 160,000-square-foot office complex on the corner of Red Hill and McGaw Avenue.
The two-building office campus, at 17300 Red Hill Ave., is near the headquarters of Edwards Lifesciences Corp. (NYSE: EW) and Pacific Dental Services; demolition work started around January.
Developed Data Center
The 1 and 3 Banting offices are less than a mile from TGS’s longtime headquarters in the city and are a few blocks away from a recently built data center the company owns just off the San Diego (405) Freeway in Irvine.
The company paid $28 million for the 4.6-acre site, at 23 Pasteur, in 2019.
On the lot at that time stood a four-story, 125,315-square-foot office building, which TGS demolished to develop its current 57,893-square-foot data facility, completed last year.
That deal followed a full-building lease TGS struck on the opposite side of the San Diego (405) Freeway, at Irvine Co.’s Spectrum Terrace office campus.
The office at 17500 Laguna Canyon Road runs about 115,000 square feet.
$240M Land Sale
TGS has been an active investor in its home city for the past few years.
Its $240 million acquisition of 42.1 acres of vacant Irvine land made headlines last year as the largest real estate deal in the city over the past decade.
The company bought the lot in late 2022 for $5.7 million per acre from Irvine-based master developer Five Point Holdings LLC (NYSE: FPH).
The deal with TGS represents more than one-fifth of the total land available for commercial development in the Great Park Neighborhoods, the FivePoint-controlled land that largely surrounds the city-run Great Park.
As of today, the lot remains vacant. The company has yet to disclose its plans for the site.