Rental mega-deal in Brea; dental HQ sells in Irvine

OFFICES: Irvine creative building trades for $34M

Irvine-based real estate investor and developer J+R Group has bought the creative office building that holds the headquarters of dental-practice manager Pacific Dental Services Inc., in what’s the largest reported single-building office transaction in Irvine so far this year.

The company paid $34 million for 17000 Red Hill Ave., a 118,000-square-foot building across the street from the headquarters of Edwards Lifesciences Corp.

The deal works out to a price of about $288 per square foot, and marks a nearly 30% premium over the $26.5 million that Palo Altobased Menlo Equities LLC paid for the complex in 2014, shortly after a major renovation project that converted the former industrial site into its current use.

The Newport Beach office of Eastdil Secured represented Menlo Equites in the sale, according to CoStar Group Inc. records.

Dental Work

A holding company with ties to the ownership group of Pacific Dental paid about $13.6 million for the Red Hill building in 2012, then a 40-year-old warehouse last occupied by an electronics and communication unit of defense and aerospace manufacturer Rockwell Collins.

It subsequently spent nearly another $11 million to renovate the building.

Pacific Dental is one of the largest dental support organizations in the country, with over 800 affiliated offices across 24 states. The company builds and manages office practices for dentists, taking care of just about everything except the actual dentistry.

With $1.6 billion in 2020 revenue, the company ranked No. 11 among OC’s largest private companies on this year’s list.

In addition to holding the dental management company’s headquarters, the site also includes a dental office among other tenants.

J+R Portfolio

The acquisition is the first reported local buy in a few years for J+R Group, an investor with ties to China that over the past decade has amassed an extensive portfolio of commercial properties and development sites along the West Coast, primarily in and around the airport area of Irvine, and in Portland, Ore.

It has been a buyer and seller over that time. Notable sales include 2581 Alton Parkway, a project J+R Group bought in 2013 and sold three years later to PLC Land Group, which then converted the warehouse site into a 170-unit apartment project dubbed The Murphy. The complex is near the intersection of Jamboree and Alton; construction wrapped in 2019.

Menlo Equities and J+R Group have been involved in other local transactions. J+R paid Menlo about $36 million in 2014 for a 143,700-square-foot office and data center project at 2525 Main St.

J+R has since sold the two buildings for about $27 million to an affiliate of World Financial Group, though the property still serves as the company’s headquarters. Apartments are expected on another part of the Main Street property.

SCP Development

In other notable area projects, J+R Group is developing a new two-story food hall within the Bloomingdale’s wing of South Coast Plaza.

J+R founder and CEO Morgan Zhang told the Business Journal earlier this year that he carefully selected the brands going into the 16,000-square-foot Collage project, which he said will “raise the bar in terms of cohesive, luxury design.”

Collage, which is located where the Charlie Palmer restaurant previously operated, is expected to include about nine concepts. The first tenant there had a soft opening a few weeks ago and more are coming online this summer.

China Interest

The Red Hill building is the second notable office sale in less than a month for property that borders the headquarters of Edwards Lifesciences (NYSE: EW), OC’s largest public company.

Last week’s print edition of the Business Journal detailed the $42.8 million sale of a six-building complex about a block away, on East Deere Avenue.

Dubbed AD/6, the recently revamped multi-tenant complex counts a Santa Ana address, and was bought by China’s Henghou Investment Holding.

Both the Pacific Dental and AD/6 deals are the largest property sales of late in the immediate vicinity of Edwards that weren’t bought by the nearly $65 billion-valued heart valve maker, which has snapped up multiple area properties in recent years to accommodate new development and hold its growing base of local workers.