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RIVERSIDE, CA-The City of Riverside has acquired a three-parcel office development called Magnolia Place from Ontario-based Red Dog Properties LLC for $9.2 million and will occupy a portion of the project, according to the CB Richard Ellis Private Client Group in Newport Beach.

Gary Stache and Pat Scruggs of the Private Client Group in Newport Beach, along with Phil Woodford and Vindar Batoosingh in the Ontario office of CB Richard Ellis, represented both the buyer and the seller.

Woodford tells GlobeSt.com that personnel from the Riverside Police Department’s emergency services division will move into about 65,000 sf of vacant space at the project, with the rest of the space to remain leased by existing tenants. Woodford notes that the office space, formerly occupied by Life Savings Bank, is highly improved, so the police personnel will be able to move into it without extensive tenant improvements.

The city’s newly acquired property is composed of three, multi-tenant, single-story buildings totaling 142,699 sf located at 10530, 10540 and 10560 Magnolia Ave. The facilities include a 122,074-sf retail and office concrete tilt-up, class B building that includes a 53,145-sf suite currently leased to Ice Town until 2012. The former Life Savings Bank office space was the corporate headquarters for the financial institution. Additionally, there are two retail buildings, encompassing approximately 7,500 sf and 13,125 sf, respectively. The three facilities are located on separate parcels. At the time of sale, Magnolia Place was 51% leased. The price works out to $86.10 per sf and a 9.8% capitalization rate.

The buildings are part of a Riverside County office sector that, in turn, makes up part of an Inland Empire office market that is one of the strongest in Southern California and the nation. The office vacancy rate in the Inland Empire was one of the lowest in the state during the second quarter, approximately 10.4% at the end of the quarter, down from 13.1% a year ago and 13.7% in the first quarter of this year. City officials say that demand for office space in and around Riverside exceeded the supply by several hundred thousand feet last year, a rare situation in a market where most cities have a surfeit of space.

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