Colony Capital JV Sells Los Angeles-Area Office Building

225 W. Hillcrest Drive. Image courtesy of Newmark Knight Frank

TriStar Realty Group has acquired a five-story Class A office building in Thousand Oaks, Calif., for $21.6 million from a joint venture between Colony Capital and SteelWave. The 158,885-square-foot building is located at 225 W. Hillcrest Drive and features a courtyard and parking.

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The office space can be divided into floorplates ranging from 20,000 to 48,000 square feet. Originally built in 1983, the property was used as Exxon’s regional corporate headquarters and later renovated in 2007. In April 2015, SteelWave purchased the office campus when it was 100 percent leased to Bank of America. The company acquired the asset alongside joint venture partner NorthStar Realty Finance, which later merged with Colony Capital in 2017. Currently, the property is only 74 percent leased to Bank of America, which will be vacating the building in December 2020.

CBRE’s John LaSpada represented TriStar, while Newmark Knight Frank’s Kevin Shannon, Ken White, Rob Hannan, Laura Stumm, Sean Fulp, Ryan Plummer and Mark Schuessler represented the seller. Stumm said in prepared remarks that this value-add property is a unique opportunity to reposition an entire building along with an underutilized 14.7-acre site.

Demand for big block medical space

TriStar is planning major renovations to convert the property into a medical office campus. Daniel Kashani, TriStar’s CEO, said in prepared remarks that large medical tenants are looking for bigger blocks of contiguous space in the Conejo Valley market. The demand for big block office space in California persists as SteelWave previously purchased a 151,300-square-foot office property in El Segundo, Calif., in November 2019 for $63.5 million.

According to NKF’s first quarter report on the Los Angeles office market this year, demand remains high despite the coronavirus concerns. Specifically, in the Conejo Valley, the report noted that there was a total inventory of more than 8.5 million square feet with nothing in the construction pipeline. The area’s average rent was $2.79 per square foot, while the vacancy rate hit 8.9 percent. Conejo Valley in particular saw 64,073 square feet of absorption during the first quarter of the year.