IRVINE, CA—As GlobeSt.com reported last week, CBRE Capital Markets' Debt & Structured Finance team arranged $158 million in financing for Airport Business Center, an office/flex industrial park here, on behalf of owner the Koll Co. We spoke with Jerry Yahr, managing principal of the Koll Co., about the property, the transaction and what it says about the industrial market in Orange County.

GlobeSt.com: What is unique about Airport Business Center?

Yahr: The unique thing about Airport Business Center is a combination of its central location right in the Airport area and the fact that it is a large portfolio of buildings and spaces controlled by one landlord. There are 68 buildings encompassing 1.2 million square feet in the heart of the Airport-area market. And on top of that, being a mix of office, industrial and a little bit of retail, as well as a combo of small units all the way up to some larger buildings really creates a unique opportunity for tenants to grow within the same business park controlled by one landlord.

GlobeSt.com: What's the market like for this type of space in this region?

Yahr: The one thing about this product type being multi-tenant, light industrial and office flex is you see more space nearby being redeveloped and turned into something else—whether it be multifamily, which is hot right now, or even some corporate hotels. So we don't really see our competition or the base of this type of product expanding; it's really reducing, which helps Airport Business Center stand out even more as a unique piece of property. Given that we have so many tenants here—more than 500—and every one of those units has restrooms and other features that make it costly to replicate, not a lot of new multi-tenant space of this kind is being built.

GlobeSt.com: Does this financing transaction represent any trends in the Orange County industrial market?

Yahr: We had a lot of lenders interested in the property, which is not unusual in the broader sense of the economy. There was not a shortage of potential lenders in competition with each other. This was very satisfying for us. If we had tried to do this refinancing two years ago, we certainly wouldn't have had the economic climate we have today, which translates into less competition.

That said, this property and location, with its unique features and long history, have made it stand out. A big part of the interest is the climate of the market itself. The Airport market, from a real estate and general economic perspective, has one of the lowest unemployment rates in California. Add to that good year-over-year job growth and the expansion of industries into the area, and you can see that Orange County itself has been very positive. Plus, real estate has been improving quarter over quarter: in Orange County, we have something like 2.4% industrial vacancy, and we had one of the strongest US office vacancies at the end of the third quarter at 14%, which is a full point down from the beginning of the year. Rental rates have been increasing, so we and the lenders see positive momentum and upside in the Orange County market. This has clearly played a role in the interest and competition we had.