Demand for Orange County industrial space remained healthy in 2019 as vacancy rates ended another year in record-low territory at 2.9 percent, fueled by a strong second-half net absorption. The movement in the second half of 2019 was largely a result of the Fed’s decision to keep interest rates low, which provided assurance for buyers that had been on the fence. The attractive interest rates have led to steady price increases, however, adaptation has been slow. The average time on the market has increased by roughly 30 to 60 days from 2018. Many buyers also struggled with post-close deferred maintenance. With the typical industrial building in Orange County being construction in 1985, buyers are often challenged with renovation costs adding to their bottom lines. Meanwhile, landlords in 2019 became more conservative in rent demands as average gains in asking full-service rents fell to 4.2 percent countywide, compared to 4.9 percent in 2018. Leasing activity remained steady with an average asking rate across Orange County of about $1 per square foot, triple net. A handful of notable new construction projects advanced in 2019. In the fourth quarter, 10 buildings totaling nearly 1.2 million square feet were completed in North Orange County, …
GRESHAM, ORE. — KeyBank Real Estate Capital (KBREC) has provided a total of $61.4 million in construction financing and Low Income Tax Credit (LIHTC) equity to Newport Beach, Calif.-based Community Development Partners for the development of Rockwood 10, a multifamily property in Gresham. In addition to the $42.6 million construction loan and $18.1 million of LIHTC equity investment from Key Community Development Corp. KBREC secured $32.4 million of fixed-rate Freddie Mac permanent financing for the property. Slated for completion in 2021, Rockwood 10 will feature 224 affordable residential units spread across five three- and four-story buildings on seven acres. As a Section 42 LIHTC project, all units are restricted to households earning no more than 60 percent of the area median income. Jonathan Woodland of KBREC’s Commercial Mortgage Group and Brett Sheehan of KBREC’s Community Development Lending and Investment team structured the financing.
PHOENIX — Institutional Property Advisors (IPA), a division of Marcus & Millichap, has negotiated the sale of Parc Midtown, a multifamily property located in Phoenix. Evergreen sold the asset to FSC Realty for $78.5 million, or $256,536 per unit. Situated at the intersection of Central Avenue and Indian School Road, Parc Midtown features 306 apartments with proximity to Indian School/Central Avenue Valley Metro Rail station and Steele Indian School Park. Steve Gebing and Cliff David of IPA represented the seller and procured the buyer in the deal.
AZUSA, CALIF. — Buchanan Mortgage Holdings has closed a $55 million loan for construction of The Orchard, a mixed-used residential and retail development in Azusa, approximately 20 miles east of Los Angeles. The borrower, Serrano Development Group, will use the loan to construct 163 market-rate apartments and 31,700 square feet of retail space. The transit-oriented development will be located in downtown Azusa at the corner of North Azusa Avenue and U.S. Route 66. The project will consist of two Class A multifamily buildings connected via a second-story footbridge, subterranean parking and ground-floor retail space. The project marks the second collaboration between Serrano Development Group and Buchanan Mortgage Holdings.
ENGLEWOOD, COLO. — A joint venture between CWCapital and Kenai Capital Advisors has acquired a three-building industrial portfolio in the Compark Business Park in Englewood. Hendricks Commercial Properties sold the portfolio for $41 million. The 263,734-square-foot portfolio includes 8560 Upland Drive, 8490 Upland Drive and 14800 Grasslands Drive. While the portfolio was fully occupied at the time of closing, the building at 14800 Grasslands Drive is now available for immediate lease or sale. The 50,488-square-foot Class A industrial manufacturing building features heavy power, large drive-in doors, dock loading, 24-foot ceiling clearance, ESFR fire sprinklers, available outdoor yard space and the ability to add additional loading. The two buildings on Upland Drive are fully occupied by a variety of tenants, including Charter Communications, Quantum Corp. and LabCorp. The facilities each feature 24-foot ceiling heights, ESFR fire sprinklers, heavy power and customization for each tenant’s specifications. Jeremy Ballenger of CBRE represented the seller, while Tyler Reed, Peter Beugg and Dominic DiOrio of Stream Realty represented the buyer in the transaction.
REDMOND, WASH. — Los Angeles-based Continental Partners has arranged $18.7 million in financing for the acquisition of Redmond Heights Center, an industrial/office flex property in Redmond, a suburb of Seattle. The borrower, ALCO Investment Co., acquired the 126,545-square-foot asset from Wakefield Redmond Heights. At the time of sale, the property was fully leased to 13 tenants. The 10-year, non-recourse loan has a fixed rate of 3.25 percent with a 30-year amortization schedule and step-down prepayment option. Carl Riggins of Continental Partners secured the permanent financing for the borrower.
Retail transaction volume was strong in January as the shorter 2019 holiday season created a tight window for year-end closings, residual transactions pushed into the New Year and gave 2020 an early jump on what should be another great year. Total transactions in 2020 should continue to build from the big start. The massive transaction volume from the second half of 2019 — more specifically, a glut of fourth-quarter sellers — has produced a wave of investors needing to complete 1031 exchange purchases in the second and third quarters of 2020. By comparison, 2019 featured a slower than typical start due to a combination of elevated interest rates and residual investor hangover from the equity markets debacle of the fourth quarter of 2018. Our sense is that 2020 will benefit from enormous velocity, driven by private investor demand and seller willingness to meet market expectations in favor of quicker transactions as fears of the late cycle, election turmoil and international unrest grow. Further evidence of seller’s alignment with market expectations, trailing available data has shown the asking price to sale ratio narrowed from nearly 12 percent in first-quarter 2019 to 3 percent in fourth-quarter 2019. This brought the bid/ask more …
SOUTH LAKE TAHOE, CALIF. — Sacramento-based Sutter Capital Group has completed the disposition of The Crossing at Tahoe Valley, a newly redeveloped shopping center in South Lake Tahoe. A private investor acquired the asset for an undisclosed price in a 1031 exchange. Originally constructed in 1973, the shopping center underwent a renovation in 2017. The new design features an institutional-quality mountain contemporary buildout. A large outdoor communal plaza offers casual seating, fire pits and an elevated stage that hosts daily live music performances. At the time of sale, the property was 87 percent leased to a mix of local restaurants, health and wellness services and boutique shops, as well as one of the top-performing Big 5 Sporting Goods stores in the retailer’s portfolio, according to Sutter. Situated on 4.9 acres at 2014-2062 Lake Tahoe Blvd., The Crossing at Tahoe Lake is less than two miles from Lake Tahoe’s southern shore. Eric Kathrein, Bryan Ley and Jake Dempsey of JLL Retail Capital Markets represented the seller in the transaction.
MERIDIAN, IDAHO — Avison Young has secured a $27.7 million loan to finance the construction of Summertown Apartments in Meridian, a suburb 12 miles west of Boise. The borrower is a joint venture between Phoenix Commercial Construction and 111 Capital. Jay Maddox and Peter Sherman of Avison Young Capital Markets Group arranged the loan, which a Los Angeles-based private lender provided. Located adjacent to the 58-acre Settler’s Park, Summertown will offer 190 units in a mix of two-story rowhouses and three-story garden-style apartments with gated front garden areas and enclosed garages. Situated on 5.8 acres, the property will feature resort-like amenities. Construction is slated to begin first-quarter 2020, with the first units delivered during summer 2020.
CHULA VISTA, CALIF. — San Diego-based Pacific Southwest Realty Services (PSRS) has arranged $11 million in financing for a medical office facility located in Chula Vista. The borrower is San Ysidro Health (formerly San Ysidro Health Center). Located at 880 Third Ave., the 23,780-square-foot property was formerly a CVS/pharmacy that was converted to a modern medical office facility. San Ysidro Health is a nonprofit organization that provides healthcare services. Services at the new center will include senior services, adult and family medicine, pediatrics, women’s health and support services. Pasha Johnson of PSRS structured the loan for the borrower.