Here's recent history of the Fed’s policy committee and its Fed Funds rate. Next Fed decision is June 24/25.
Irvine office trade nets owner 10% a year
July 1st, 2008, 12:01 am · 2 Comments · posted by Jeff Collins
An $80.1 million deal closed Monday, showing that there’s still some strength in the commercial real estate market despite a slowdown in sales, price appreciation and financing.
KBS Realty Advisors of Newport Beach announced that it has closed on the two-building Dupont Centre, with 251,000 square feet of office space just blocks from John Wayne Airport in Irvine. The two buildings — an eight-story tower at 2201 Dupont Dr. and a five-story building at 2301 Dupont Dr. — last sold in 2004 for $54 million. That’s an increase of 48%, or a yearly appreciation rate of 10.4% a year.
KBS Realty Advisors was founded by Peter Bren, Irvine Co. Chairman Donald Bren’s brother, and Chuck Schreiber in 1992. The Dupont Centre seller is MS Crescent Two SPV LLC. Fort Worth-based Crescent Real Estate Equities Co. bought the brick-and-glass complex (including a four-level parking structure with nearly 1,000 spaces) from a partnership of USAA Real Estate Company and Prudential Real Estate Investors in April 2004.
The 22-year-old complex is 89% leased to such major tenants as EMC Corp., CBIZ Accounting & Tax, and Parsons Transportation.
Demand for the airport area had been growing in recent years, and office rents there are among the highest in Orange County. But office vacancies have been increasing recently due to overbuilding and falling jobs.
Vacancy rates rose to almost 14 percent in Orange County this year, up from 8.5 percent at the start of 2007. The vacancy rate is expected to rise to 17% to 18% by the end of 2008, Buchanan Street Partners executive Tom Sherlock predicted recently. He forecast that the office market will take about two years to recover.
July 1st, 2008 at 7:32 am
Worst Deal I have seen in awhile for a building around the airport, the problem is that KBS had to place the money and buy assets but now they picked up a marginal building with very little upside. Not sure what there rational was, but I wish them luck as they are going to need it.
Maybe there plans are to tear the buildings down and build High Rise Condo’s?
July 1st, 2008 at 7:42 pm
Somebody should get fired for that deal. And, somebody at MS Crescent Two should get a huge bonus for that move.
This reminds me of several acquisitions a variety of companies in the RE sector made in 2005 and 2006. Just because you buy something doesn’t mean the market will continue to appreciate and that it was a worthwhile investment. There are several companies that come to mind, yet the CEO’s and those responsible for grossly overpaying for an asset or a group of companies are still with their job. Because in Corporate America the CEO’s and board members have the luxury of “pick-and-chose-responsibility”. They take responsibility if the deal turns out to be great and they blame the market for the bad times.
That’s Corporate America and the joke is on the shareholders (that don’t receive much dividends, if any…).
There was also still “strength” in the market when that $600,000 SFR sold on top of the market (the one that was featured on the OCR front page). And there were also still plenty of empty seats left when we used to play “musical chairs” in kindergarden….that was until the music stopped playing…