Hines Wraps $235M SoCal Office Sale

Intersect Campus in Irvine. Photo courtesy of JLL

A four-building office property in Irvine, Calif., has changed hands for a record sum. MetLife Investment Management and PGGM purchased the Intersect campus for $235.3 million from Hines. According to CommercialEdge data, this is the largest office sale so far this year for Orange County.

JLL’s Capital Markets group arranged $117.6 million in acquisition financing for the buyer—a 10-year fixed-rate loan provided by Allianz Real Estate. The broker also worked on behalf of Hines to procure the buyer, as well as arranging a previous round of financing in 2019. According to CommercialEdge, MetLife Insurance Co. also provided a $182.1 million bridge loan for the asset in 2020. This loan’s maturity date is 2023.

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Hines acquired the 453,975-square-foot property in 2015 for $121.5 million, from Menlo Equities. In 2018, the investor completed a $27 million renovation at the campus, focusing on improvements to the amenity package and outdoor spaces. The property is currently 85 percent leased to a variety of tenants.

Campus details

Intersect sits on a 15-acre site within the Irvine Business Complex submarket. The four Class A buildings are located at 17877 and 17875 Von Karman Ave., 17838 and 17872 Gillette Ave. They were constructed between 1989 and 2004, and range in size between 55,350 and 166,442 square feet.

The recently completed renovation was designed by IA Interior Architects and LandLAB. It saw the addition of outdoor amenity spaces with WiFi, TVs, putting green, basketball court, a fitness center and conference facilities. Other features include a two-acre courtyard, subterranean parking and bike rental service.

Intersect’s location allows for immediate access to Interstate 405 and other major thoroughfares, while also being about 3 miles from the John Wayne Airport. The growing presence of technology companies in Orange County allowed for an investment which aligned with MetLife’s current goals of pursuing differentiated assets within their competitive markets, according to Portfolio Manager Michael Vogt.

Priciest office deal for Orange County

At roughly $518.2 per square foot, the transaction marks one of the highest prices for office space recorded this year in Orange County. According to CommercialEdge data, about 2.5 million square feet of space changed hands year-to-date in the market, generating $811.4 million in sales. On average, investors paid $328.2 per square foot for these properties.

The Square on Main

The previous record was held by a transaction completed in March, in Orange County’s St. Joseph Center submarket. A joint venture of TriGate Capital and LPC West acquired a 420,000-square-foot office campus—The Square on Main—for $97.2 million from WCB Properties. A $69.6 million loan was provided by Capital One Bank for the deal.

Office vacancy within the Irvine Business Complex started to improve in recent months, after stagnating at the beginning of the year. As of May, average vacancy in the submarket was at 16.7 percent, down 50 basis points month-over-month, CommercialEdge data shows. Orange County’s overall vacancy was 15.4 percent as of May.