The Santa Ana, CA-based subsidiary of Grubb & Ellis Co. acquired the property at 2800 E. Commerce Center Place on behalf of tenant-in-common investors in November 2004. The sale represents the 51st securitized 1031 TIC exchange property taken full-cycle.
"Since acquiring 2800 East Commerce, [we have] successfully realized investor returns in-line with our business plan and added significant value with the recent execution of a 10-year lease renewal with Intuit, the building's sole tenant," Jeff Hanson, Grubb & Ellis' president and chief investment officer, says about the decision to sell. "As a result of this added value, our TIC investors agreed that now was the time to sell this asset and lock in a solid return."
The buyer was Hidden Willows LP, an affiliate of Sequoia Management Co. Thomas Woods and Peter Loeb of Woods, Loeb & Co. in Redwood City, CA, represented the buyer. The seller's team consisted of Ryan Gallagher, a senior vice president in the Newport Beach, CA office of Grubb & Ellis, and Thomas Nieman, a principal with Picor Commercial Real Estate Services in Tucson.
Completed in 1999, the 15-acre asset has what the seller describes as "excellent curb appeal." The building contains a fitness center, full-service cafeteria with outdoor patio and on-site education and recreation facilities. The grounds include a 1,100-space surface parking lot, with a ratio of 8.15 spaces per 1,000 sf.
According to Nieman, the asset sold very quickly, thanks to a shortage of investment opportunities in the local market. "When the property hit the market, we were overwhelmed with inquiries," he says. "The buyer stepped up immediately. There was a short look, a short escrow and it was gone."
Nieman tells GlobeSt.com the market has essentially seen no speculative office development in 20 years, which is why so little investment product is available. "The big part of our market has been more related to the office condo and build-to-suit market," he says. "That's where it's seen its expansion. We've built over two million sf of office condos." In fact, 2800 E. Commerce property was originally built for Intuit rather than as a spec project.
"We don't have many quality newer properties with quality long-term leases," the broker continues. "When they do come up, there's usually a lot of interest and they don't hang around." At the same time, he adds, demand for investment property has soared. "If you go back a few years, we'd have to call all around to drum up interest. Now we get calls weekly. We're just on the radar now," he says.
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