Central OC Office Asset Values Heading Up

Central Orange County is seeing a rise in property values, thanks to strong tenant demand and rising rents. The recent sale of City Tower illustrated the upward trend. KBS Strategic Opportunity REIT purchased the 20-story, 435,177-square-foot class-A office building from Torchlight Investors for $147.5 million or $338 per square foot. City Tower is the tallest building in Central Orange County, and is leased to UC Irvine Medical Center, Enterprise Rent-A-Car, Travelers Insurance and York Risk Services Group.

“This area has been very active with multiple requirements and notable demand from the healthcare and government sectors, specifically,” Paul Jones, a senior managing director at Newmark Knight Frank, tells GlobeSt.com. “Furthermore, several of the high-profile office towers in Central Orange County—like City Tower—have been purchased by well-capitalized, institutional buyers that are investing significant capital to improve the assets, resulting in increased tenant demand. All of this is bolstered by the lack of development in the submarket.” Jones, along with Kevin Shannon, Sean Fulp and Blake Bokosky, represented the seller in the deal.

In fact, the upswing in property values motivated Torchlight to dispose of the asset, especially because it had repositioned and stabilizing the property since taking full ownership in 2014. “City Tower is a premier class A-office tower in Orange County and, as a result of the healthy capital markets environment, the current lack of Class A product along the West Coast and strong interest from all buyer groups, Torchlight Investors recognized it was a great opportunity to monetize their trophy asset,” explains Jones.