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Prudential Fund Buys Irvine Office Building

Purchase, estimated at $70 million, is among the largest in Orange County in recent months.


An institutional real estate fund has acquired one of the John Wayne Airport area's newest office towers for an estimated $70 million in one of the largest Orange County commercial real estate sales in recent months.

The fund, managed by Prudential Real Estate Investors of Parsippany, N.J., purchased the 12-story tower known as Opus Center Irvine I. The 268,000-square-foot building at 2020 Main St. in Irvine opened in late 1999 and is home to such corporate and professional tenants as Sun Microsystems, New York Life, PricewaterhouseCoopers, Harvey & Co. and Miller Brewing.

The real estate investment advisory arm of Prudential Financial bought the property from developer Opus West Corp. and its minority partner, an affiliate of SPI Holdings. Opus West is the regional affiliate of commercial property developer Opus Corp., headquartered in Minnetonka, Minn.

Opus frequently sells its developments to institutional investors after the buildings are filled with tenants and generate stable rental revenue. Opus West built and leased 2020 Main amid strong demand for space in the airport vicinity, Orange County's biggest and priciest office market.

Its income stream attracted Prudential's commingled real estate fund despite today's softer economy, a Prudential spokeswoman said.

Prudential wouldn't disclose what the fund paid for the property, but Orange County real estate sources estimated the price at about $70 million based on other recent sales. Chris Hoffman, Tony Malk and Steve McKenzie of investment specialist Eastdil Realty brokered the deal.

With the 2020 tower 95% leased, Opus last year started construction on a "sister" 14-story, 321,000-square-foot high-rise at 2040 Main St. scheduled to open this year. Law firm Knobbe Martens Olson & Bear pre-leased six floors in a 10-year deal reportedly valued at more than $50 million.

Opus has plans for a third tower as well, but the airport market probably won't see much office construction soon. The airport area's tenant base has been contracting for the last few calendar quarters. Brokerage Grubb & Ellis reported that occupancy of the 28.8 million square feet of office buildings in the area shrank by more than 700,000 square feet--or nearly 2.5%--in 2001.

The predictable result is slight downward pressure on rental rates, which have fallen about 5% since early last year. Still, the airport market's vacancy rate of 13.5% isn't considered alarming--especially compared with more than 30% in southern Orange County, where the technology crash has left a lot of empty office space.

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