06/15/2011

Southern California Office Listings Pick Up

A cluster of office-property offerings has popped up in Southern California as the market revives from its deep funk.

The listings include a 997,000-square-foot portfolio in the Los Angeles and San Diego metro areas that could trade for around $160 million, or $160/sf. Also newly listed is the 280,000-sf Bank of America Tower in downtown San Diego, with an estimated value of about $70 million, or $250/sf. Eastdil Secured has both listings.

Meanwhile, Equity One recently began shopping two Southern California properties (see article on Page 9).

Bank of America Tower, owned by Lehman Holdings, is 82% occupied, with Bank of America committed to a long-term lease for 126,000 sf. The 20-story building, at 450 B Street, was constructed in 1982 and underwent $9 million of renovations in 2008-2009 that included overhauling the lobby and upgrading the elevators.

The portfolio, offered by Shidler Group of San Diego, is 88% leased by 90 different tenants. Three of the eight office and office/flex properties are less than 70% occupied, providing upside potential for a buyer who can fill empty space. Others are fully leased, including the largest, the 372,000-sf Savi Tech Center, an office/flex building at 22705 Savi Ranch Parkway in Yorba Linda.

The other properties are:

Yorba Linda Business Park 1, at 22343-22340 La Palma Avenue in Yorba Linda (115,000 sf, 80% occupied).

Yorba Linda Business Park 2, at 22833 La Palma Avenue in Yorba Linda (50,000 sf, 100% occupied).

South Coast Executive Center, at 1503 South Coast Drive in Costa Mesa (61,000 sf, 70% occupied).

Gateway Corporate Center, at 1370 Valley Vista Drive in Diamond Bar (85,000 sf, 67% occupied).

Carlsbad Airport Corporate Center, at 1950 Camino Vida Roble in Carlsbad (121,000 sf, 100% occupied).

Via Frontera Business Park, at 10965 Via Frontera in San Diego (79,000 sf, 49% occupied).

Poway Flex, at 13550 Stowe Drive in Poway (112,000 sf, 100% occupied).

Bids will be taken on individual properties or combinations. Shidler bought the portfolio from GE Real Estate affiliate Arden Realty at the end of 2006 for $175.5 million.

Two weeks ago, Shidler and partner Angelo, Gordon & Co. of New York brought the 356,000-sf Seaview Corporate Center in San Diego to market. That property, also listed with Eastdil, is valued at about $100 million.

Other recent offerings include a 490,000-sf portfolio in the Los Angeles suburbs of Yorba Linda and Woodland Hills that is expected to see bids of around $100 million. The owner, a joint venture between Bantry Holdings of Los Angeles and Chicago-based Guggenheim Partners, has tapped Jones Lang LaSalle to market that six-property portfolio.

Los Angeles, Orange and San Diego Counties suffered mightily during the recession, when sales of office buildings fell off sharply. Only 19 properties traded hands in the region during 2009, down from 97 at the marketís 2007 peak, according to Real Estate Alertís Deal Database, which tracks transactions of at least $25 million. But 27 properties changed hands in 2010 and seven sales have closed so far this year. Capitalization rates for Class-A buildings are around 7%, significantly higher than in top markets like New York and Washington.

During the downturn, occupancy across the region fell to about 80%, with some submarkets seeing dips to nearly 50%. But the regional average has since crept up to just under 85%, although rents largely have remained flat.

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