SAN BERNARDINO, CA—In mid-2015, a joint venture of Oaktree Capital Management and Hines acquired the 17-building Tri-City Corporate Centre in San Bernardino, in one of the largest office property deals in the Inland Empire. The master-planned complex located near the intersection of Interstate 10 and Interstate 215 contains more than one million square feet of office space on 153 acres. GlobeSt.com talked with Mark Jacobs, managing director with Oaktree Capital Management, on their decision to invest in the office portfolio and the ongoing opportunities they see in the County. (County of San Bernardino is a GlobeSt.com Thought Leader.)

GlobeSt.com: What spurred Oaktree's decision to acquire office product in San Bernardino County?

Mark Jacobs: We're always on the lookout for potential new investment opportunities and generally focus on markets that others tend to shy away from. San Bernardino, along with the greater Inland Empire, was hit hard following the financial crisis and hasn't rebounded as quickly as major markets such as Los Angeles and San Francisco. While others might view the slower recovery in San Bernardino as a negative, we view it as an opportunity. While the growth in the area might have been slow coming out of the financial crisis we believe there will be higher growth over the next few years.

GlobeSt.com: What made this particular portfolio attractive?

Jacobs: A number of things, but first was the size. It's very difficult to purchase an office portfolio of this size in San Bernardino or anywhere in the Inland Empire. Most projects consist of a few small buildings so it's hard to build up a large portfolio. In addition, we liked the mixed-use master plan of Tri-City which totals 153 acres. The well-designed master plan offers our tenants a very attractive office environment along with numerous retail amenities.

GlobeSt.com: What have been some of your first steps to reposition the office properties and why?

Jacobs: We immediately started a comprehensive $3 million dollar capital plan to modernize the common areas of each building and improve the overall aesthetics of the campus. This plan includes the following: nine lobby renovations; twenty-four restroom renovations; improved way finding and building identifications signage; speculative suite program to accommodate smaller tenants looking for “move-in” ready office suites; landscape improvements to reduce water usage; additional EV charging stations; and a new property website.

GlobeSt.com: How successful has leasing been to date? Can you cite some new tenants that you have brought to the properties?

Jacobs: We've been very pleased with the leasing activity to date. Since closing in March, we've had over 140,000 square feet of leasing activity between renewals, expansions and new leases. Some of our new tenants include Molina Healthcare and Aspiranet.

GlobeSt.com: Do you plan any additional acquisitions?

Jacobs: We are always looking for new investment opportunities. Hopefully we can find another project in the area to purchase.