Full-building lease for County of Orange in Tustin among tops for year

REAL ESTATE: 120K SF; another Steelwave win

The County of Orange has inked a 120,000-square-foot deal for the entirety of Tustin’s 1382 Bell Ave. building, part of the

AirSpace office complex that runs along Red Hill Avenue.

The deal marks the fourth-largest office lease inked in Orange County since the start of 2021, according to brokerage data.

Sources indicate the county will consolidate several of its administrative divisions into the low-rise building, which is expected to house north of 300 employees.

Despite changing work habits over the course of the pandemic, there’s still demand for larger offices, especially buildings that aren’t of the high-rise variety, according to brokers that worked on the deal.

“There is a real scarcity of available buildings over 100,000 square feet in the OC Air

port Area,” said Michael Hartel of Colliers, who represented the landlord, Foster Citybased SteelWave, in the transaction along with colleague Nick Velasquez and Ross Bourne of CBRE.

“That being said, tenants of +100,000 square foot are equally unique. It was a perfect match and we are excited to get the deal done,” Hartel said.

Joe Bevan and Wade Clark of JLL represented the County of Orange.

AirSpace

SteelWave bought the property, previously used as a flex industrial manufacturing and distribution building, as part of a nearly $49 million deal in 2019 with Chicago-based real estate investor GEM Realty Capital Inc.

The two-building deal included the $25 million buy of 1382 Bell Ave. and a $23.5 million deal for an adjacent, 103,000-squarefoot creative office building at 15771 Red Hill Ave. known as 33.7 North.

The properties at the intersection of Red Hill and Bell Avenue, across the street from the western edge of the Tustin Legacy development, total nearly 223,000 square feet.

SteelWave has implemented upgrades at the Red Hill property and planned to convert the Bell Ave building to creative office use, with the two buildings repositioned “into a state-of-the-art, low-rise, creative office campus,” the company previously said.

In the wake of the pandemic and its resulting impact on the office sector, SteelWave slightly shifted course to maintain some flex aspects of the Bell Avenue property.

County of Orange

The Bell Avenue building was built in 1986 and runs 120,000 square feet on 5.9 acres.

The office was previously fully leased to Balboa Water Group, a maker of bath and spa parts. The company has since moved to Costa Mesa next to John Wayne Airport.

The newly leased building “will be built out to the county’s exact specifications to include a majority finished office space,” SteelWave said in a statement.

“We are extremely excited to execute this lease with the County of Orange and provide them with a home here in Tustin,” said Jonathan Hastanan, managing director of acquisitions and development for SteelWave. “The size and tenure of this tenant speak highly to the already changing landscape of this area and reaffirms our belief in this submarket.”

The lease brings the AirSpace office complex to nearly full occupancy; Tricon American Homes inked a deal in 2019 to occupy a bulk of the Red Hill office.

The company, which rents out singlefamily homes, signed a 78,000-square-foot lease at the building, relocating its headquarters there from Santa Ana.

There’s still about 15,000 square feet remaining at the Red Hill office, with Colliers heading leasing efforts.

Anduril

The deal marks another large leasing win of late for SteelWave, whose best-known property in OC is The Press, an under-construction creative office project in Costa Mesa that’s being built in phases over the next two years.

The investor is heading the project with Dallas-based Invesco Real Estate. The duo bought The Press site for $65 million in 2018; some construction at the site kicked off the following year.

The project cost for converting the industrial site at 1375 Sunflower Ave.—across the street from Costa Mesa’s Ikea store—reportedly tops $200 million.

The development team struck a mega deal earlier this year when Anduril Industries’ leased the entirety of the development situated at the former LA Times printing facility in Costa Mesa.

The deal, announced in February, is for 640,000 square feet, including 450,000 square feet that’s currently under construction, as well as a newly planned 190,000square-foot research and development building.

It’s among the largest office leases in OC’s history.

Anduril, a tech-focused defense and border protection company founded by Palmer Luckey, is expected to move into the project by summer 2022.

100M-SF Portfolio

SteelWave also owns The Landing in Costa Mesa, a three-building office complex spanning 229,093 square feet near The Lab in the city’s Sobeca district.

The company acquired the low-rise campus for $72 million in 2019, shortly after the firm’s acquisition of AirSpace.

SteelWave also redeveloped the former Emulex Corp. campus next to The Press into a creative office project called the Hive; the Los Angeles Chargers use the campus as its headquarters.

The campus was sold by SteelWave to a venture between Invesco and Goldman Sachs in 2018 for $84 million.

Since its founding in 1968, SteelWave has acquired nearly 100 million square feet of industrial and office product across the Western U.S. for a combined value of over $11.8 billion, according to the firm.