Office Campus Sold for Redevelopment
Cushman & Wakefield has advised the sale of four office buildings totaling 221,921 square feet on approximately 13 acres in Lake Forest (Orange County), California.
The portfolio sold in two separate transactions to the joint venture of Western Realco and RREEF, which acquired the sites on a land basis with intent to redevelop them into new high-end industrial use.
Three of the four buildings in the portfolio sale are currently occupied by a company who makes in-flight entertainment systems for airlines, and the fourth building is vacant. The company confirmed publicly it had signed a lease last summer to relocate to the new Park Place campus in Orange County’s Airport Area, and is expected to vacate at expiration—now less than a year away—all three of its buildings in this portfolio sale.
The first transaction included the sale of three 48,480 SF office buildings totaling 145,440 SF located at 26110, 26140, and 26160 Enterprise Way that Western Realco and RREEF will demolish to develop a single new Class A industrial building totaling approximately 162,000 SF on the 8.4 acre site.
The second sale involved a single vacant 76,481 SF office building located at 26250 Enterprise Way that the buyer will demolish to construct a new Class A industrial building totaling 78,000 SF on the 4.5 acre site.
Cushman & Wakefield vice-chairman, Jeff Cole, alongside colleagues from the company's Irvine office, Ed Hernandez and Nico Napolitano, represented the parties to both sales, and were joined by David Dowd of CBRE in the sale of the 26250 Enterprise Way site.
He says: "The sale of this campus marks a significant shift in our market cycle as fully functional, high quality low-rise office product is being razed for the redevelopment of new Class A industrial product.
"This exchange is certainly reflective of the positive outlook for future demand for light industrial supply in Orange County."
Cushman & Wakefield director, Nico Napolitano, adds: "The conversion from office to industrial will remove a large block of future vacant office space that would have accounted for approximately 15% of Lake Forest’s office inventory.
"In the past, the risk associated with the tenant’s lease expiration dampened office investor interest in the area.
"This transaction will provide a more competitive environment for Lake Forest and South Orange County owners and investors looking to capitalize on accelerating demographic and leasing fundamentals."
Lake Forest is located just South of the Irvine Spectrum in the heart of South Orange County. The city is well-situated adjacent to the Interstate 5 and 405 Freeways and the Foothill and Eastern Transportation Corridors of the United States which provide easy access to Los Angeles, San Diego, and the Inland Empire. The Orange County Airport and an Amtrak station are only minutes away.