Airport-Area Trades Expected in 2014

ALISO VIEJO, CA-Office investment activity is expected to ramp up in the Airport submarket in particular during the early and middle parts of 2014, Blaine Annett and Colby Annett, co-managing partners of Stream Realty Partners, tell GlobeSt.com. Several large trades and anticipated to close during that time in the popular submarket.

As GlobeSt.com reported earlier today, both office trades and leasing will be largely focused on the Airport submarket and Central County next year, according to the Annetts. The partners say South County has been the strongest submarket in Orange County, outperforming all of the other submarkets in the county.

Griffin Towers at 5 & 6 Hutton Center Dr. in the South Coast Metro area of Orange County, 1 and 2 MacArthur Blvd. and Tustin Center—all in the Airport submarket—are expected to trade hands officially in the first or second quarter of 2014, the Annetts say. These high-end, higher-quality office buildings can be purchased for below replacement cost, trading at $200-$250 per square foot, whereas ground-up development—excluding the cost of land—can run between $350-$375 per square foot. “There seems to be a great investment for owners in this market with a long-term approach,” says Colby Annett.

The way Stream tracks the Orange County office market, it finds roughly 101 million square feet of class-A and –B institutional properties, with roughly 17.9% current availability. About 26 large blocks of space (75,000 square feet and over) are available in the market. “There was talk of not a lot of big blocks of space being available in the Orange County market, but there are now,” says Blaine Annett. “This will delay construction until 2015 since we need the absorption of those big blocks of space.”

Blaine Annett adds, “Ending on a positive note, we're optimistic and excited about where the overall Orange County market has come over the past 24-36 months. Conversations with tenants are about them expanding, not contracting. They're growing and they need more space. Companies are expanding and the amount of investment capital looking at Orange County seems to have doubled in the past 18 months where people want to own real estate in Southern California. San Diego and Los Angeles have recovered faster than Orange County, but Orange County is clearly on its way to recovery. There's an upside in the high-quality product we have in this market. The availability seems like a lot, but we will steadily chip away at it and improve in this market.”