This Large Vacancy Presents Opportunities

SANTA ANA, CA—Pacific Center's 400,000-square-foot vacancy, one of the largest blocks of contiguous vacancy in the Orange County market, gives its new owners the opportunity to split it up or sell it off, CBRE's first VP Paul Jones tells GlobeSt.com. As we reported earlier this month, Jones, along with CBRE's vice chairman Kevin Shannon, first vice Scott Schumacher, and senior associate Blake Bokosky, represented the seller, a large institutional owner, and the buyers, the Brookhallow Group and PCCP in the sale of Pacific Center. The property consists of two office buildings totaling 392,877-square-feet at 1600 and 1610 E. St. Andrew Pl. here in Santa Ana. We spoke exclusively with Jones about the sale, the property and what's special about the Santa Ana office market.

GlobeSt.com: What opportunities does this property present for the buyers?

Jones: It was definitely a value-add opportunity. It's nearly 400,000 square feet of vacancy, which is one of the largest blocks of contiguous vacancy in the market. With two buildings sitting on one parcel, the owners can either split it up to potentially lease the buildings up or sell them off to users. The sale price was at a significant discount to replacement cost, which was a big metric for the buyer.

GlobeSt.com: In what ways is Pacific Center either unique to or representative of the office market in Santa Ana?

Jones: Most buyers are viewing Orange County in general as very attractive from a price-per-square-foot perspective compared to San Francisco, Seattle and West L.A. Buyers underwriting rent growth are very aggressive and optimistic, which is why there is a tremendous amount of capital chasing every deal in Orange County.

GlobeSt.com: What else can you tell us about the office market in Santa Ana?

Jones: Santa Ana is definitely evolving as Main and Main in the Airport submarket gets filled up. There's 11% to 12% vacancy in Santa Ana, and there's some spec development going on, including Lincoln Property's Cornerstone development, about which Kevin Hayes is very optimistic. Also, Trammell Crow is about to break down more than 1 million that will be delivered to the market within the next 18 to 24 months. This is the first time anyone outside of the Irvine Co. is doing spec office.

GlobeSt.com: What else should our readers know about Pacific Center?

Jones: There was a tremendous amount of interest in it. We did more than 35 property tours. It's one of the last few true value-add deals in Orange County because of where we are in the cycle; we're not moving into core-plus and core space. But 400,000 feet empty is about as value-add as you can get without the development risk.