Five-Building Campus Sells at 25% Discount from 2018 Price as Buyers Eye Potential Residential Conversion
A transformative transaction has taken place in Anaheim, California, where a five-building office complex has sold for $62.5 million. This deal represents a significant 25% reduction from the original investment of $83.1 million made by Pendulum Property Partners and a Goldman Sachs affiliate—in 2018. The recent acquisition by New York-based JEN Partners, renowned for its focus on residential land, marks a strategic shift toward commercial properties, especially as the firm eyes potential residential conversion opportunities.
A Closer Look at the Axis Business Park
The Axis business park, encompassing a substantial 306,664 square feet, is strategically situated adjacent to Angel Stadium in Anaheim’s Platinum Triangle district. The complex includes several addresses: 2121-2170 Towne Centre Place, 2190 Towne Centre Place, and 2390 Orangewood Avenue. The transaction signifies JEN Partners’ second major acquisition in Orange County, following the purchase of a nearby three-building campus earlier this month for $29.5 million. This proactive approach illustrates a growing interest in the Anaheim market as JEN diversifies its investment portfolio.
The Role of CBRE in the Transaction
In this high-stakes acquisition, JEN Partners found its partners in ParkTerra, a developer, while commercial real estate experts CBRE represented the sellers. The team, including Anthony DeLorenzo, Sammy Cemo, Bryan Johnson, and others, highlighted the unique advantages of the Axis complex, such as its stabilized income, redevelopment potential, and prime location. As DeLorenzo emphasized, “This transaction reflects the continued momentum in the Anaheim market, where quality assets like Axis stand out,” indicating that the property is not merely a financial investment but a strategic opportunity.
Evaluating the State of the Orange County Office Market
The recent sale comes at a time when Orange County’s office market is grappling with considerable challenges, evidenced by vacancy rates hovering between 17-19%. Nonetheless, the region has emerged as a fertile ground for office-to-residential conversions, with a staggering 26 projects totaling approximately 4.2 million square feet either in progress or on the horizon. This emerging trend indicates that many investors and developers see potential in repurposing traditional office spaces for residential or mixed-use developments, thus meeting the evolving demands of urban living.
JEN Partners’ Shift in Investment Strategy
Founded in 2005 by Reuben Leibowitz, JEN Partners has predominantly focused on residential land repositioning and lot banking. Its largest residential land fund, closing at $360 million in 2019, positions the firm as a leading investor in residential sectors. However, the recent acquisitions in Orange County signal a potential pivot toward exploring alternative real estate sectors. This strategic realignment could catalyze opportunities that integrate office spaces into thriving residential communities.
The Future of the Axis Business Park
The Axis complex’s coveted location within Anaheim’s evolving entertainment district, alongside major redevelopment projects like OCVibe, opens the door for potential alternative uses. Its proximity to landmark attractions, such as Angel Stadium, enhances its appeal for residential or mixed-use redevelopment. While CBRE has marketed the portfolio as a residential conversion project, specific plans from ParkTerra and JEN Partners remain to be announced. However, the combination of location, market momentum, and growing interest in transforming office spaces sets the stage for an exciting evolution in this area.
In conclusion, this acquisition not only signifies a noteworthy transaction in the Anaheim office market but also reflects broader real estate trends. As investment firms like JEN Partners pivot their strategies and explore redevelopment opportunities, the potential residential conversion of the Axis complex could significantly impact the community’s future landscape.
For those interested in staying updated on Anaheim’s real estate market developments, visit Commercial Observer and CBRE for more insights into property transactions and market trends.
