Looking for Low Rises
Investors are on the hunt for low-rise office buildings, according to Lee & Associates' Allen Basso and Brian Garbutt, here in the company's Irvine office. They're "one of the last product types to come back in favor with investors," Allen tells us, adding that the market in Orange County has bottomed and rents have been flat for about two years. Vacancies have dropped as low as 9% for one- and two-story buildings in the airport area.
These fundamentals, coupled with low prices for low-rise properties, have caused capital to startlooking again. "Inventory is restricted, and there isn't going to be any new construction in the next few years," Brian tells us. Moreover, once rents rise in high-rise offices, they'll be a flight to low-rise office product among cost-conscious tenants. (It's an easy move, since gravity does all the work.) Recently, Allen and Brian repped both the buyer, Turner Real Estate Fund II, and the seller, Bristol Berry Tract Ltd, in the $3.4M sale of Bristol Corporate Center in Costa Mesa, an all-cash deal.
