January 12, 2015

OC Office Rocks Creative

OC employment is up and employers are looking for more office space. But that's not all—they're looking for higher-quality, more creative space, and developers are chomping at the bit to provide it. That's one reason we're excited to hold our 4th Annual Orange County State of the Market on Jan. 29 at the Hotel Irvine. Sign up here.

Among our speakers will be Bixby Land SVP-operation Aaron Hill, who tells Bisnow the companies that are growing are the ones looking for more innovative office space, and that demand continues to outpace supply in Orange County. He says developers are looking at adaptive reuse to pump up the creative office footprint in the market. (Recently ASML US Inc inked a 93k SF lease at Bixby's THE Campus in San Jose, bringing the 227k SF property to full occupancy nine months after completion.)

For its part, Bixby has three creative office projects completed or in development in OC. One is 15771 Redhill Ave, designed by Boto Design Architects, which also did properties for Yahoo and Adidas. The single-story building will be improved with 10k SF of new office space, a glass pavilion atrium at the main point of entry and expanded window lines along Redhill. The building will feature a Bixby Retreat outdoor area and can accommodate one or two tenants. Hear more about creative office trends and other property types at our 4th Annual Orange County State of the Market on Jan. 29 at the Hotel Irvine at 7:30am. Get your tickets here.

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2015: Year of Strong Fundamentals

Westcore Properties CEO Don Ankeny tells us this year will be one of unusually strong fundamentals for OC: an improving economy, very healthy office and industrial demand, and virtually no spec development. “We'll continue to see steady absorption and rent growth, coupled with tightening vacancy rates,” he says, adding that his company's going to look for value-adds as well as development and re-entitlement opportunities. Above is Don participating in the Challenged Athletes Foundation's Million Dollar Challenge: a seven-day, 620-mile fundraising cycling tour from San Francisco to San Diego.

Last month, Westcore Properties acquired a Class-A office building and six-acre site in the city of Orange for $25M. The 98k SF building at 999 W Town and Country Rd is home to architecture and construction firm AECOM. Don says the site offers “intriguing” mixed-use redevelopment possibilities. The deal brings San Diego-based Westcore's holdings in SoCal to 11.7M SF.

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Investors Keen to Lock in Low Rates

In one of the early deals of 2015, Newport Asset Management Group acquired the 184k SF mixed-use McFadden Center in Santa Ana from Olen Properties for $30M. Lee & Associates Irvine's Kurt Bruggeman (right, snapped with colleague Ryan Swanson), who repped the buyer, tells us demand for quality investment properties will be high for the balance of 2015. Those strong fundamentals are attracting investors--and so far interest rates are still low (but everyone senses this may be the last year for that).

Even so, each deal is unique. McFadden Place, Kurt adds, is a little unusual, in that it's about 80% business park and 20% retail, making it less appealing to some institutional investors without an appetite for some retail in their portfolio. Kurt tells us the 7% cap rate was an attractive purchase for Newport and that it would have been lower if the property was 100% business park. Ryan says Newport plans a long-term hold, and will renovate the retail center and façade. Olen Properties was repped by Mike McCann, Ryan Gallagher and Dan Curtis of HFF.

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The Shopping Center Group Opens First West Coast Office

The Shopping Center Group has opened its first office West of the Mississippi River in Santa Barbara. Partner Mike Hieshima (snapped with partner Philip Kyle) tells Bisnow the office is the first step in a long-term strategy for the Atlanta firm to create a dominant West Coast presence. The office is small (three brokers), but the two partners bring decades of experience and major clients to the firm, including Starbucks, Kimco Realty and Regency Centers.

Mike tells us the office is starting North of LA County, with listings in Santa Barbara, San Louis Obispo and the 200k SF Mandalay Village Marketplace in Port Hueneme, among others. TSCG has 23 offices in 16 states, and last year worked on more than 1,500 transactions totaling nearly $2B.

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Tell Us

Last week, we attributed the design of Beats Electronics' new space to Howard Building Corp (HBS), who were the builders. The creative design was in fact the work of Bestor Architecture. We regret the error. Cool space, Bestor (and nicely built by HBC). Send ideas and suggestions to dees.stribling@bisnow.com