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October 21, 2013
Brownfield Law Eases Redevelopment
Earlier this month, Gov. Jerrry Brown signed AB 440 into law, which transfers legal authority to local governments to clean up contaminated properties and holds financially accountable the party responsible for the contamination. (Swamp Thing gives his dirty applause.) Cox Castle Nicholson attorney Robert Doty tells us how the lawâs going impact brownfield redevelopment statewide.
AB 440 will make the redevelopment of brownfield properties in California easier, Robert says. The bill restores and expands a powerful tool that cities and counties use to convert polluted, underutilized areas into mixed-use neighborhoods, affordable housing sites, TOD sites, and other redevelopment success stories. "By restoring those powers, AB 440 puts a key player in the brownfield redevelopment process--local government--back on the field," he says. Snapped at Union Square in San Fran: Robert and his wife Cathy Garza.
The law also restores immunities that encouraged both local government and developers to take on brownfield sites, Robert explains. AB 440 thus lowers a barrier to entry, making the market for such properties more robust. But there will be some brownfield sites where AB 440 cannot be fully applied, because some properties may not qualify under the statute, he adds. Over the course of his career, Robert has worked on numerous contaminated sites, including industrial plants, landfills, rail yards, bulk terminals, closed military facilities, timber mills, dry cleaners, and service stations. (No word on whether he glows in the dark.)
Build Locally, Borrow Locally
Snapped right before the recent opening Vivante on the Coast in Costa Mesa: Nexus Cos CEO Curt Olson, Bank of America Merrill Lynch VP Allen Staff, VP Dean Parsons, and SVP Kevin Jennings, and Nexus Cos prez Cory Alder. Cory tells us that the total project cost for the seniors housing property, which was developed by Nexus, was about $62M. The company raised $22M from the local investment community, which he says shows the high value of the concept to those who live in Orange County. The additional $40M construction loan was financed by Bank of the West, and included participants such as Bank of America and Bank of Texas.
Independent Retailers Important to the Mix
Independent retailers can be a rare commodity at retail properties, but Vestar VP acquisitions and development Jeff Axtell tell us that independents are important to the 1M SF District at Tustin Legacy. (The time is right to open our magic supply store.) Recently Union Market Tustin inked a lease for 22k SF at the property--in a former Borders store--and starting next year will offer a marketplace of independent food, fashion, and lifestyle businesses. "It's important for us to have independent retailers at the District because it complements our existing tenants, creating the variety that the market demands," Jeff says. "By giving shoppers variety unavailable at the competing projects nearby, it entices them to come to the District for a different experience."
Hines Bags Yorba Linda R&D Complex
Hines and Oaktree Capital Management have acquired the 372k SF Savi Tech Center, a four-building office and R&D complex in Yorba Linda, from LNR Property. Though the buyers declined to specify a price, they did say they'll be spending some money for upgrades, such as lobby renovations and HVAC improvements. (Perhaps a lobby bowling alley is in order?) As one of the largest corporate campuses in the northern Orange County submarket, it's a prize acquisition, according to Hines managing director Ray Lawler, who leads the firm's OC development and investment office. Its location has access to freeways that service the rest of OC, greater LA, and the Inland Empire, he tells us, and the surrounding mixed-use Savi Ranch Center has strong retail, dining, and hospitality. The property is currently 87% leased to three tenants: Ashley Furniture Homestores, Carefusion, and Nobel Biocare USA. Cushman & Wakefield repped the seller.
Big Block Industrial's Hard to Find
Snapped at the recent NAIOP Directors dinner in San Diego: Boeing Realty Co enterprise leader-acquisitions and dispositions Stephane Wandel and JLL senior managing director Louis Tomaselli. Orange County's industrial market has been much the same over the past two to three years, Louis tells us, with the availability of high-quality, modern space, particularly in large blocks, being very limited. Tenants are looking at neighboring markets, such as the Inland Empire, to satisfy specific requirements.
Louis adds that the sweet spot for OC industrial has become 100k SF to 200k SF. "While large users have been forced to either renew at existing locations or explore opportunities in outside markets, mid-size users have become more competitive, and are driving up demand," he says. The growing competition among users and investors is translating into rising rental rates and sale prices.
