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IRVINE, CA—Customization and branding aren't common in Orange County's office stock, but Harbor Associates has seven projects in various stages of renovation that prove there's a market for office space that isn't cookie-cutter, company principal Joon Choi tells GlobeSt.com. Each asset (five in Tustin, one in Irvine and one in Lake Forest) is in different stages of renovation. We spoke with Choi about the projects and some of the firm's operational wins in this market.
Since our discussion with Choi, the firm has acquired Tustin Corporate, a 43,517-square-foot office building located at 18302 Irvine Blvd. in Tustin in an all-cash transaction with the Bascom Group LLC. Harbor acquired the asset through a distressed on-line auction bid process from an out-of-state special servicer. This transaction marks the eighth value-add office acquisition for Harbor in the last two years and second acquisition for the firm in the last two weeks, coming on the heels of the firm's acquisition of Bespoke Century City in West L.A. The acquisition expands the firm's existing footprint in Orange County to seven buildings across five different projects and represents the firm's third acquisition in Tustin, where it owns close to 300,000 square feet. CHoi describes the project further in his description of the fifth project the firm is working on, below.
Harbor is planning to reposition the asset through a comprehensive rebranding and renovation program that includes cosmetic upgrades to the exterior of the building, upgrading lobbies and restrooms, installing new creative-office spec suites and including new outdoor seating spaces. As part of the repositioning, the project will showcase 15-foot first-floor ceiling heights, authentic brick architecture and private patios for individual tenants on the third floor.
The property is located on a prominent hard corner in Tustin and within ¼ mile of Old Town Tustin, which features a street of historic buildings that date back to the 1880s and is home to many of Tustin's most popular restaurants and retail destinations. Within 1 mile of the property, there are ten health clubs, three grocery stores, two banks, six hotels and more than 130 restaurants.
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GlobeSt.com: Please give us the lowdown and strategy behind each of the seven projects you are currently developing in Orange County.
Choi: For the very first building we purchased, 14201 Franklin in Tustin, we are developing the first fully customizable creative-office project in Orange County, and we have landed a Fortune 500 company to lease the entire 40,000 square foot building. We set out to do something a little bit different and executed on the plan; it's the first fully customizable building that was done on a spec basis, and we have a credit company for 10-plus-year term for the full building. Because of a confidentiality agreement, I can't reveal the tenant's name, but it is a real estate service company.
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The second, third and fourth projects are just across the street at 14192 Franklin, 2642 Michelle and 14101 Myford in Tustin, and these three office/flex buildings total 215,000 square feet. We bought these in October 2016 and are completing the renovations late June 2017, and we executed one 20,000-square-foot lease with a marketing company that's going public: Advantage Solutions. The company is one of the country's largest agencies. One of the three buildings is stabilized, and we're completing renovations on the rest of that campus, delivering to the market a best-in-class creative-office building of 69,000 square feet and a creative industrial building that is 95,000 square feet. We bought them off-market, and we were able to generate credit-tenant activity and deliver the product on schedule and 20% under budget.
The fifth project is Tustin Corporate, a 43,000-square-foot building we just acquired in mid-June at 18302 Irvine Blvd. in Tustin. We hired a new asset manager, Brad Johnson, recently from EverWest/Oaktree/LBA, who will be rolling out renovations shortly to accentuate some of the property's great features including 15-foot first-floor ceiling heights, private third-floor patios and authentic brick and timber finishes. We like this building's walkable location to Old Town Tustin and more than 100 nearby restaurants.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
