SRG Closes Out Pacific Pointe for $54M

LONG BEACH, CA-Sares-Regis Group has leased or sold all seven premium headquarters buildings totaling 667,142 square feet in Pacific Pointe at Douglas Park, its master-planned commercial development next to Long Beach Airport. The last three buildings sold for a combined total of $54 million.

Pacific Pointe is the region's largest collection of multiple LEED-certified buildings under the USGBC's latest construction rating system. According to Larry Lukanish, SVP of SRG's commercial investments division, “All seven buildings were delivered and sold in the last 12 months. We knew that premium buildings would be in great demand in the South Bay market. Nevertheless, we are gratified by the strong market response. This project exceeded our expectations.”

Of the last three buildings sold, a 150,701-square-foot building was purchased by an investor for $19 million; a 135,000-square-foot building sold for $18 million to United Pacific, an automotive restorer and accessory designer and manufacturer; and a 125,000-square-foot building sold for $17 million to Turbo Air, a maker of refrigeration cases for restaurants and grocery stores. United Pacific and Turbo Air are consolidating operations from nearby Carson.

Building sales opened one year ago at the 33.6-acre project. SRG acquired a total of 193.6 acres adjacent to the airport from Boeing Realty Corp. The property includes two aircraft hangars on 52 acres that were leased in 2013 for 15 years by Mercedes-Benz USA. Known as the Boeing 717 hangars, they total 1.1 million square feet. The balance of the property, approximately 100 acres, has potential for 3.2 million square feet of office, industrial, retail and hotel development.

SRG was represented in all three transactions by CBRE brokers Brian DeRevere, John Schumacher and Tom Caplan. United Pacific was represented by Andrew Lara of Daum Commercial. CBRE's Greg Dyer represented Turbo Air, and the investor was represented by Joe McKay and Mike Wolfe of Lee & Associates.

As GlobeSt.com reported in August 2013, Sares-Regis Group began construction on a premium, 240-unit mixed-use apartment development on 1.74 acres in the community of Little Tokyo in Los Angeles. While the firm declined to disclose anticipated construction costs for the project, it did tell GlobeSt.com that its value upon completion will be $108 million.

• Fees and loan limits at Fannie Mae and Freddie Mac: “The mortgage giants were set to increase their base guarantee fee and make changes to other fees they charge that would have resulted in an increase of 0.14 percentage points on a 30-year fixed-rate mortgage. However, these planned fee increases have been temporarily delayed by Melvin Watt, who was sworn in on Monday as the new director of the Federal Housing Finance Agency. There has also been talk of cutting conforming loan limits at the mortgage giants as well. Both events would have a significant impact on the housing market.”
• Mergers and IPOs: “The New Home Co. LLC and City Ventures Inc. delayed plans to go public last year, but may still do so at some point this year.” (Update: Industry reports say that the New Home Co. announced Tuesday that it has commenced an IPO of 7,812,500 shares of its common stock. The IPO is currently expected to be between $15 and $17 per share, and the company expects to grant the underwriters an option to purchase up to an additional 1,171,875 shares of common stock to cover over-allotments. The company's common stock has been approved for listing on the NYSE under the symbol “NWHM,” subject to official notice of issuance of the shares.) “There was also a lot of M&A activity in the builder space, which may continue as prime developable land becomes more scarce and builders try to achieve greater economies of scale.”
• Mortgage rates:“Mortgage rates are expected to steadily climb throughout 2014, especially as the Fed takes the pedal off QE. Higher fixed rates mean that more borrowers will opt for adjustable-rate mortgages. Since this time last year, the ARM's share of total mortgage-application activity has more than doubled from about 3% to close to 8%, according to data from the Mortgage Bankers Association. Slowly rising rates themselves should not have a significant negative effect on homebuyer demand if it is accompanied with a growing economy and job market. However, if rates are rising for other reasons like to combat inflation, while lending may tighten up due to stricter regulations, that poses a significant threat to the housing market.”
• Housing and equity gains: “Gains for housing and equities in 2013 came in a relatively easy fashion. The easy money has come and is likely gone. Political differences, shifts in Fed policy, sharp gains in stocks and home prices over the past few years and the potential for slower economic growth in the US and abroad will require savvier decision-making.”