A recently redeveloped and fully leased Los Alamitos office property has traded hands at a 350% premium to its pre-COVID pricing, the latest sign of optimism for the area’s in-flux commercial real estate market.
The Katella Office Campus, a 150,000-square-foot site that’s set to become the new headquarters for the North Americas division of Epson America Inc., traded for $59 million. It’s among the top area office deals this year, and the largest commercial real estate sale in Los Alamitos in over five years, according to brokerage data.
A South Korean private investor, Fine Investment Corp., bought the site from Lincoln Property Co. for $393 per square foot.
Larger-sized office deals in Orange County approaching $400 per square foot are rare outside of Irvine and Newport Beach.
That strong pricing speaks to the new long-term tenant as well as ongoing investments in the site made by Lincoln Property, which counts a local commercial portfolio topping 7 million square feet, the sellers said.
“It’s a great deal for us and shows that people are still making investments in Orange County,” said Executive Vice President Parke Miller.
Lincoln Property Co. and Fine Investment Corp. were both self-represented in the deal.
Lincoln Property paid $13 million for the two-building office campus in 2014, when it was just 10% leased.
SuperMedia Inc., a provider of print, mobile, and Internet advertising, had owned and occupied the buildings, which brokerage data indicates are the largest offices in the city.
The offices are on about 10 acres and just east of the San Gabriel Valley (605) Freeway. They are next to Los Alamitos City Hall, and about a mile west of the Los Alamitos Race Course.
The new owner then set to work on revamping the property, spending north of $5 million in a renovation that updated the exterior of the property and added new paving, landscaping and additional seating.
CDG Builders was the general contractor of the project, and Ware Malcomb provided architectural design services.
Shortly after the renovation wrapped in 2019, Lincoln secured a new tenant for the entirety of the campus, among the county’s top lease deals made last year.
Printer and scanner manufacturer Epson America announced plans last March to move its Americas headquarters from Long Beach to Los Alamitos.
It started tenant improvements last summer, which included connecting the two buildings via a new skybridge, and additional interior work.
The company started moving into the facility last month when its Long Beach lease wrapped. It’s been moving workers into the building in phases; the relocation has been postponed as the pandemic forced much of the firm to work from home over the year.
“Epson has had a presence in OC for almost 45 years, and this new modern facility is perfect to serve their current and future needs,” Miller said.
Epson America Chief Executive Keith Kratzberg previously said 600 employees will move to the new facilities in Los Alamitos, which will be able to accommodate more than 700 workers.
“The new campus in Los Alamitos will broadly incorporate Epson’s latest business solutions, including digital signage, laser projection, enterprise workgroup, and large format printers,” Kratzberg said.
Epson will rank as No. 2 among top employers in the city, trailing only the Los Alamitos Medical Center, according to city records.
The move into the new facilities is expected to be complete by the early part of next year, officials told the Business Journal this month.
The deal is the first local buy for Fine Investment, a property investor with a focus on tenants in the electronics industry. The firm took out a loan with Hanmi Bank to finance the purchase, property records indicate.
The property will be a long-term holding for the company, notes Miller.
“There’s a lot of uncertainty in the market right now, but the product types that continue to perform really well are single-tenant, net leased assets,” said Miller. “This buyer was attracted to Epson as a tenant as well as the well-positioned property.”
The deal marks the second time during the pandemic that an office property has garnered interest from Korean investors.
In October, the Business Journal was first to report on the sale of Two MacArthur, a nine-story building alongside the Costa Mesa (55) Freeway, for $86 million, or about $391 per square foot.
Korea Investment & Securities Co., a financial services affiliate of investment firm Korea Investment Holdings, is that tower’s new owner.
There’s only been a handful of area office sales topping $50 million this year, as the pandemic has slowed the pace of transaction making for that type of property.
Industrial sales, in contrast, have seen more activity (see real estate column, page 9).