Blackstone Sells OC Office Towers With a Big Price Cut
Office trades for 36% less than what Blackstone paid to acquire it in 2014
By Greg Cornfield April 7, 2023 3:20 pm
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In the face of rising headwinds in the office market, Blackstone (BX) has unloaded two 13-story buildings in Southern California at a big discount.
A joint venture between Barker Pacific Group (BPG) and Kingsbarn Realty Capital paid $82 million, or $146 per square foot, for the Griffin Towers office park with 560,000 square feet of Class A office space in Santa Ana, Calif., in Orange County. That’s 36 percent less than the price Blackstone paid to acquire the site nine years ago.
The real estate giant bought the property from Angelo Gordon and Lincoln Property Company for $129 million in 2014. The office towers in the past have also traded for $89.9 million in 2010 and $183.8 million in 2007, records show.
A Blackstone spokesperson declined to comment. The towers were built in 1987 at 5 and 6 Hutton Centre Drive, and tenants include UKG, Michael Baker International, Psomas, Nations Direct Mortgage, HNTB and the Ayn Rand Institute. The property includes a fitness center and six-story parking structure near John Wayne Airport, and the 55 and 405 freeways.
The recent decline in tenant demand and overall market uncertainty has been significantly detrimental to the region’s office properties. Orange County’s vacancy rate reached an 11-year high of 17.7 percent in the first quarter, with Class A vacancy at 22.8 percent, according to a Newmark (NMRK) report. Indeed, in the office park next door, LaSalle sold an office building for $24.9 million, or 55 percent less than what the firm bought it for in 2019, according to reports.
“While there are market challenges for owners of office buildings, we believe in the future of high-quality office environments with great locations and robust amenities, which Griffin Towers offers its tenants,” BPG’s Mark Handin said in a statement.
BPG’s portfolio now includes eight properties totaling more than 3 million square feet, including The Fine Arts Building, 626 Wilshire Boulevard and 5055 Wilshire Boulevard all in Los Angeles.
Newmark’s Kevin Shannon, Paul Jones and Brandon White represented the seller in the Griffin Towers deal. Newmark’s David Milestone and Henry Cassiday represented the buyer. CBRE’s Dean Chandler, Justin Hill, Peter Wells and Taylor Friend will continue leasing Griffin Towers.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
