Last year’s top Orange County deals were driven in large part by reinvention.
About $3.4 billion worth of dealmaking is represented on the Business Journal’s annual listing of top commercial sales and leases. Data for the listings came from real estate market tracker CoStar Group Inc. and Business Journal coverage over the year, plus a few deals submitted by brokers.
Pricing on Upswing
Rising property valuations in the strong local and national economies, combined with continued interest from local and out-of-town investors, are represented across our listings.
In the office sector, whose 10 biggest sales totaled about $1.5 billion, nearly twice the number of any other product type, more than half of the transactions exceeded $300 per square foot, and a few cracked $400 per square foot.
Five years ago, $300-per-square-foot deals were a rarity on our listing.
Notable office buyers include a number of the area’s best-known and wealthiest investors, such as Igor Olenicoff’s Olen Properties Corp. and Hilrod Holdings, the holding company for Corona-based Monster Beverage Corp.’s top two executives, Rodney Sacks and Hilton Schlosberg.
Opportunity in Air
Investors say OC’s market still offers its share of opportunity, though, based on the number of deals involving properties with large amounts of vacancy, soon-to-empty buildings, and properties being prepped for drastic makeovers.
Prominent holdings in the process of being reinvented dominate our listing. Notable ones include:
• The newly built Five Point Gateway, the top local office deal of the past decade, at $443 million. It’s still in the process of being leased; originally conceived to hold just Broadcom Ltd.’s operations, the campus is now a multitenant one after the chipmaker cut back local operations (see story, page 1).
• C.J. Segerstrom’s nearly $187 million buyback of the Sears department store property at its South Coast Plaza mall, the most closely watched retail deal of year, and the second-priciest sale on our retail list. Industry observers say the glitzy center is likely to transform the struggling retailer’s space.
• J.C. Penney’s offloading of its nearly 1.1-million-square-foot Buena Park distribution facility, one of the county’s largest buildings. It’s moving operations elsewhere in a cost-cutting move as it and other large department store operators continue to face sales woes.
The $131 million sale to Oak Brook, Ill.-based CenterPoint Properties was OC’s top industrial sale of the year; No. 6 was a Santa Ana building sold by Sears.
• The second-largest industrial sale of the year, involving the long-vacant printing press previously used by the Los Angeles Times in Costa Mesa. The new owner, SteelWave Inc., plans a massive creative-office project at the site that’s been in the works for a few years.
Reinvention was also taking place for sellers in the apartment sector of our top deals.
• Newport Beach-based Irvine Co., OC’s largest apartments owner and a rare property seller, has unloaded a number of older rental complexes here in the past two years. Its sale of Merrick Apartments in Placentia for $104 million was No. 1 on the listing, and the $43.6 million sale of Garden Grove’s City Villas was No. 7.
