Hines JV Sells Office Property In Orange For $70M As Rexford Plans Industrial Redevelopment
Public records don't yet reflect the transaction, which closed in late August, but sources with knowledge of the sale put the price tag at approximately $70M.
"We're expecting a long-term shift in the way people utilize office, and we're recognizing that maybe some of this Class-B, Class-C suburban office may not be needed in the future," Rexford Industrial Executive Vice President of Investments and Acquisitions Patrick Schlehuber said.
Rexford plans to eventually transform the site into Class-A industrial space. It is 100% leased to Volt Information Services, a staffing company. Volt sold its offices to a joint venture between Hines and Oaktree Capital Management in 2016. Public records show the JV paid $35.85M, according to Reonomy.
At the time of the 2016 sale, Volt agreed to lease 100% of the campus back from the JV for 15 years. Volt is still occupying the property, Cushman & Wakefield Vice Chair, Capital Markets Jeffrey Cole said.
The Volt Campus wasn't on the market, but Rexford identified it as a possible redevelopment opportunity and made an offer, Schlehuber told Bisnow. When the current tenant's long-term lease is up, Rexford expects to move on plans to create a Class-A industrial facility on the property.
New industrial construction often happens on sites that previously housed older industrial uses, since land is hard to come by in Orange County. The OC hit its highest level of new construction in the past three years in Q2, thanks in large part to one big project in Fullerton where a paper goods manufacturing property is being redeveloped into a 1.5M SF logistics center. Demand is also high. Orange County's industrial market had a Q2 vacancy rate of 1.6%, according to a Cushman & Wakefield report.
Rexford has also closed on an office building in Torrance in an industrial area, buying the Torrance Technology Campus in August for $182M. It is closing on another similar transaction Friday that is close to the Volt Campus in Orange, Schlehuber said. Including the sale that is expected to close Friday, Rexford has closed 30 acquisitions this year to date, Schlehuber said.
Cole worked on the transaction along with Jeff Chiate, Ed Hernandez, Rick Ellison, John Griffin and Nico Napolitano of Cushman & Wakefield, which represented both the sellers and the buyer, Cole said.