Local investors turned their attention to large fixer-upper properties across Orange County last year as insurance companies looking to invest here largely placed their money in more stabilized assets in a banner year of dealmaking.
The 10 biggest office, industrial, retail and apartment sales brought nearly $3.55 billion, more than double the $1.65 billion cumulative total in 2014.
Listings of the top deals, including the area’s largest commercial property sales and the largest office and industrial leases, begin on page 24.
Sales listings are of individual properties only; no larger portfolio deals or sales of minority stakes in specific properties are included.
Data for the listings were provided by CoStar Group Inc. and augmented with information about additional deals reported by the Business Journal over the course of the year.
Office Deals Dominate
Office sales, as is usually the case here, were the dominant product type by dollar volume. The top 10 transactions totaled nearly $1.8 billion, and half of them topped $100 million.
MetroCenter at South Coast, a three-building office complex in Costa Mesa, was the biggest transaction. The 800,000-square-foot campus sold in December for a reported $233 million in a deal brokered by Eastdil Secured.
A venture between Costa Mesa-based McCarthy Cook & Co. and Madison, N.J.-based Prudential Real Estate Investors bought the 17-acre property and is planning a substantial renovation with a goal of turning it into the county’s first high-rise property featuring creative-office designs.
The property’s three offices, which were built in phases between 1984 and 1991, were about two-thirds occupied at the time of their sale by San Francisco-based RREEF Funds LLC.
A similar plan is in store for the former Quintana campus in Irvine, a four-building, 430,000-square-foot midrise campus at the intersection of Main Street and Von Karman Avenue.
The complex once served as the local hub of Washington Mutual Inc. but has sat largely vacant for the past seven years.
The new owners, a venture between the Irvine office of Hines Interests LP and Pacific Investment Management Co. in Newport Beach, are undertaking a major renovation after paying a reported $121.5 million for the property in August.
They said they plan to turn the site, which they renamed Intersect, into “the most unique and differentiated campus environment in the airport area.”
Insurance firms were involved in four of the top 10 office buys last year, including for a trio of mostly occupied airport-area properties.
Insurance companies and other institutional investors like the fact that Orange County is one of the few big national office markets where high-quality buildings can be acquired at prices below their replacement costs, according to brokers with the Newport Beach office of brokerage HFF LP, which worked on several of last year’s biggest office deals.
No distressed properties were reported among the top 10 office sales for the second year running, following several years when bank-owned and other troubled buildings made up a sizable portion of dealmaking.
Only one office sale represented in the top deals of the year involved an owner-user: Irvine-based Banc of California Inc. $76.4 million purchase of 3 MacArthur Place in Santa Ana for a new headquarters building.
Owner-users represented three of the top 10 industrial sales, whose combined transaction value was about $271 million, down from about $400 million the year before. It was the only one of the four product types whose year-over-year top deals sales totals declined.
Newport Beach-based Bixby Land Co. made the largest reported industrial buy last year with its $44.3 million acquisition of Kawasaki Motors Corp. U.S.A.’s former Irvine headquarters.
The 262,463-square-foot building is being prepared for a conversion into a creative-office property following Kawasaki’s departure to a new location in Foothill Ranch—last year’s fifth biggest industrial lease.
Bella Terra Tops
Prudential Real Estate, along with the MetroCenter offices, also played a part in the largest transaction of any type reported last year when it bought a 75% stake in the Bella Terra Shopping Center in Huntington Beach for a reported $288.8 million.
San Jose-based DJM Capital Partners Inc., which has been an owner and operator of the shopping center since 2005, retained a 25% stake following the April deal and will continue to manage the property.
Retail property sales represented in the top deals totaled about $740 million, up more than 300% over 2014’s cumulative totals.
Orange County’s largest apartment sales totaled about $760 million last year, more than three times the 2014 figure.
The $122 million sale of the Madison Park complex in Anaheim to a venture between Intercontinental Real Estate Corp. and MG Properties took the top mark for multifamily sales. The 768-unit complex sold for about $158,000 per unit.
The largest transaction not represented on the list likely was LBA Realty’s sale of a 45% stake in its Park Place mixed-use campus in Irvine to Principal Real Estate Investors, a Des Moines, Iowa-based institutional investor.
Principal Real Estate paid close to $370 million for the minority stake in the nearly 2-million-square-foot office and retail property in a deal brokered by Eastdil Secured, according to CoStar records. That puts the campus’ value at about $809 million, or $370 per square foot.
Irvine-based LBA is exploring a sale this year of another large portion of its stake in the campus, which it bought in a series of transactions in 2009 and 2010, according to real estate sources.
