Brokers Report Few 'Trophy' Properties Sold : Real estate: Big players are out of the market for commercial structures, broker says. Smaller investors are buying in the $2-million to $10-million range.

Brokers Report Few ‘Trophy’ Properties Sold : Real estate: Big players are out of the market for commercial structures, broker says. Smaller investors are buying in the $2-million to $10-million range.

By MICHAEL FLAGG

Dec. 6, 1990 12 AM PT

TIMES STAFF WRITER

NEWPORT BEACH —

If 1988 and 1989 were the years of the splashy deal in Orange County real estate, 1990 looks like it will turn out to be much quieter based on a survey of sales of larger commercial buildings this year.

So far there haven’t been any deals the size of the Atrium, two 10-story towers linked by a glass atrium near John Wayne Airport that sold for $80 million last year, or three others at Newport Center sold by Pacific Mutual Life Insurance for $83 million the year before. Those were two of the largest deals in Southern California those years.

Any similar large deals aren’t likely the remainder of this year, said Joseph A. Leon, a broker at Coldwell Banker Commercial Real Estate.

Most of the big buyers--the pension funds and the big Japanese investors--spent much of the year on the sidelines amid concerns about an impending U.S. recession. And Japanese investors were troubled by declining real estate prices and a weak stock market back home.

So most of the buyers this year, according to the Coldwell Banker survey, were smaller investors--both Japanese and American--whose deals ranged between $2 million and $10 million.

“Lots of the big names we’re used to seeing aren’t on the list,” Leon said. The brokerage firm surveyed stores, industrial buildings and offices that sold for more than $3 million during the first nine months of 1990.

“It’s more the smaller buildings than the trophy buildings that are selling,” said Mark Van Ness of Sperry Van Ness, a Newport Beach brokerage.

The largest deal on the Coldwell Banker list was the Commerce Plaza office project on Birch Street in Newport Beach, sold for $32.9 million.

The largest industrial project was Lewis Business Center, two office and research and development buildings in Fullerton that went for $9.8 million.

The John Dominis building on Coast Highway in Newport Beach was the largest retail building, selling for $19.1 million. The three-story Dominis building and the Commerce Plaza project were bought by Japanese investors, according to Coldwell Banker.

Sales didn’t slow for lack of a product, Leon said. About half a dozen big office buildings are on the block this year and may soon be joined by Irvine’s Taco Bell building, whose Japanese owner, Shuwa Corp., says it is considering selling.

Smaller buyers now in the market are primarily focusing on how much money they can make from a building, Leon said. Cap rates--a measure of return on investment in real estate--were a median 8.4% on the 57 deals concluded in the last few days of 1989 and the first nine months of 1990, the survey found.

That cap rate is probably higher than the year before, Leon said, although he’s not sure because the brokerage didn’t do a survey in 1989.

“People are taking a close look at how much a building is leased up, how much the rents are,” Leon said. “They’re buying on real numbers.”

ORANGE COUNTY’S BIGGEST DEALS Sales have closed escrow on 11 commercial properties in the county with a price tag of more than $10 million since the last week of 1989. Of the 11 properties, at least five were purchased by foreign investors, including the highest-priced deal, the sale of One Pacific Plaza to Bentall Development Co. of Canada.

Sale Square Cost Per Project Price Feet Sq. Ft. One Pacific Plaza, Huntington Beach $33,250,000 283,400 $117.33 Commerce Plaza, Newport Beach 32,875,000 270,000 121.76 John Dominis Bldg., Newport Beach 19,100,000 55,910 341.62 Anaheim Corporate Center, Anaheim 15,300,000 158,149 96.73 Park MacArthur, Newport Beach 13,200,000 72,087 183.11 Shearson Lehman Bldg., Mission Viejo 12,587,500 71,300 176.53 The Pavilion at Lantern Bay, Dana Point 12,250,000 48,000 255.21 Summit Office Plaza, Laguna Hills 11,150,000 55,314 201.58 Cypress Corporate Plaza, Cypress 10,700,000 85,619 124.97 Bristol/Warner, Santa Ana 10,600,000 107,900 98.24 Campus Plaza, Mission Viejo 10,200,000 58,560 174.17

Source: Coldwell Banker Commercial Real Estate Services