Another Orange County Office Sells at a Loss
Half-mile road in Santa Ana has hosted some significantly discounted office transactions this year
By Greg Cornfield December 13, 2023 1:40 pm
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The half-mile-long Hutton Centre Drive has become ground zero for sinking office values in Orange County, Calif.
In the latest loss, Harbert Corporation and Cypress Office Properties — the owners of the 10-story office at 3 Hutton Centre Drive in Santa Ana — sold the asset to an entity controlled by Gardena-based Tireco for $28.9 million, property records show. The landlords acquired the 200,443-square-foot property from TIAA in November 2016 for $50.5 million.
This sale comes after Blackstone this spring sold the neighboring 560,000-square-foot Griffin Towers at 5 and 6 Hutton Centre Drive for $82 million, or 36 percent less than the asset was acquired for in 2014; and after LaSalle Investment sold a 217,000-square-foot property at 4 Hutton Centre Drive earlier this year for 55 percent less than what the firm bought it for in 2019.
CBRE (CBRE) arranged and announced the sale of 3 Hutton earlier this month but declined to disclose the sale price or the names of either party involved in the transaction. The building currently has seven tenants leasing a little more than 62 percent of the building. The office was built in 1985 and underwent $3.5 million in capital and tenant improvements in 2018.
“High-quality office assets in Orange County continue to be well received by the investment community as evidenced by the 21 offers received for the property,” CBRE Vice Chairman Anthony DeLorenzo said in a statement. “The new owner now has a generational Class A office building opportunity with in-place cash flow and income growth opportunities.”
The building’s submarket saw a drop in availability in the third quarter this year, according to CBRE’s research. Further, Optima Tax Relief signed a 40-month lease at Griffin Towers in November for 38,090 square feet. But investment and asset sales have been particularly muted this year amid rising economic headwinds and rising interest rates, while the sales that make it to the finish line do so for a considerable discount.
CBRE’s DeLorenzo, Sammy Cemo, Bryan Johnson, Matt Pourcho and Nick Williams negotiated the sale on behalf of the sellers.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
