An affiliate of apparel company Vans Inc. is under contract to buy the 1588 South Coast Drive office building in Costa Mesa.
Vans—Orange County’s fifth largest apparel company by employee count and its largest by revenue—has entered into an agreement to buy the distinctive building that once held the headquarters of ICN Pharmaceuticals Inc. and later Valeant Pharmaceuticals International.
The black-granite-clad building—which faces the San Diego (405) Freeway and is next to the South Coast Collection retail center—is one of the largest empty office buildings in the county.
The building, which runs about 180,000 square feet, is expected to sell by the end of June.
Vans is paying a little under $52.3 million, or about $290 per square feet, for the office, according to regulatory filings.
The building is currently owned by Irvine-based Banc of California Inc., which paid $40 million, or about $222 per square foot, for it in 2013.
The bank bought the office with the expectation of moving its expanding operations to Costa Mesa, but it has thus far opted to stay in its current location at the Irvine Towers office complex.
Cypress HQ, Workers
Vans currently has its headquarters in Cypress at an industrial building on Katella Avenue where it is the primary tenant.
The company’s lease there runs until early 2017.
Vans is the skate shoe and apparel division of Greensboro, N.C.-based VF Corp., which has a market value of about $30 billion.
Vans employs nearly 450 people in OC, according to the Business Journal’s most recent list of apparel brands with operations here.
The building it is buying is likely large enough to hold roughly 700 people, but it might need a fair amount of interior renovations to be compatible with the company’s needs.
The property also comes with about 15 acres of unused land, which in theory could hold a skate park or other outdoor amenity compatible with Vans’ business.
Those types of features, along with its prominent location next to the freeway, would make Vans “a perfect fit” for the building, according to Louis Tomaselli, senior managing director for the Irvine office of brokerage JLL.
Tomaselli has been involved in several of the building’s prior sales transactions, including last year’s deal with Banc of California. He said he has worked with other investor and developer groups that were interested in buying the property this time around.
Potential Development
Excess land at the 15-acre site would be large enough to hold an additional 100,000 square feet or so of new office space. Developers have also broached the idea of apartment development on the land but have faced resistance from city officials.
Significant development at the site isn’t likely to take place if Vans completes the purchase, which would mark the sixth time the building has changed hands since 2007 and mark the most expensive sale of the building during that time.
Other deals have ranged from a low of $30.5 million in 2009 to a high of $40 million in 2014, with owners ranging from Abraxis Biosciences Inc. founder Patrick Soon-Shiong to Fountain Valley-based MemorialCare Heath System.
The three-story office hasn’t been close to reaching full occupancy for most of that time.
The building long served as the headquarters of Valeant, which previously operated under the ICN Pharmaceuticals name.
Valeant sold the building in 2007 and moved to Aliso Viejo, in part to distance itself from Milan Panic, ICN’s colorful and controversial founder and former chief executive.
A venture of Boston-based investment adviser AEW Capital Management LP and Cor Realty Advisors in Irvine paid Valeant—which was later bought by Biovail Corp., took the Valeant name, and moved to Canada—a reported $38 million for the office.
AEW and Cor Realty put nearly $8 million into renovating the property before selling it in 2009 for a discounted $30.5 million in the midst of the recession.
The buyer was Abraxis BioScience, a Los Angeles-based biotechnology company whose chief executive, Soon-Shiong, is one of Southern California’s wealthiest residents.
Abraxis’ research and development operations moved to the Costa Mesa facility, but in 2010 the company was sold to New Jersey-based Celgene Corp. The Costa Mesa building had another change in ownership the following year, at an undisclosed price, to reflect the Abraxis sale.
MemorialCare Health System bought the building in late 2012 from an affiliate of Celgene operating as 1588 South Coast Drive LLC. The deal was valued at $34 million.
The plan at the time was for the hospital operator to move its headquarters and some other offices in Orange County to the Costa Mesa location.
MemorialCare changed plans, selling the office to Banc of California when the opportunity to buy its 300,000-square-foot Fountain Valley property became available.
