Parsons sells Pasadena headquarters for $320 million
In one of the largest real estate sales since the last boom, investors have purchased the Pasadena headquarters of engineering company Parsons Corp. for $320 million.
The 22.7-acre campus on the northern edge of Old Pasadena was bought from Parsons by Morgan Stanley Real Estate Investing and Lincoln Property Co. The international engineering firm has agreed to remain in its signature 12-story headquarters tower as a tenant for 15 years.
The sale was the largest office transaction in Los Angeles County since Aon Center in downtown Los Angeles sold for $327 million at the peak of the real estate cycle in 2007, according to real estate brokerage statistics.
Parsons, which has been based in Pasadena since it opened the tower in 1974, will use proceeds from the sale to acquire other firms and fund a new investment arm of the company called Parsons Enterprises, company representative Erin Kuhlman said.
“We are being proactive to deploy our capital and grow our business,” Kuhlman said. The private company is debt free and had revenue of $2.7 billion in 2010, she said.
The Parsons site holds 950,000 square feet of offices in three buildings. The two smaller buildings are leased to other tenants including healthcare provider Kaiser Permanente and the Federal Emergency Management Agency, according to real estate data provider CoStar Group Inc.
The sprawling campus is also zoned for as much as 900,000 square feet of additional development that might include a combination of offices, stores and apartments.
“The Parsons campus represents a strategic complement to our existing portfolio because of its excellent location, strong tenants and potential for future development,” said John Klopp, co-chief executive of Morgan Stanley Real Estate Investing.
Parsons’ location next to one of the region’s busiest shopping and residential districts made the property sought after by investors, said real estate broker Kevin Shannon of CB Richard Ellis.
“It’s an incredible piece of real estate in Old Pasadena,” said Shannon, who represented the buyers. “Investors want to buy buildings with the best tenants in the best markets in the best locations.”
Pasadena commercial real estate appraiser Steve Norris said he doubted that the new owners would try to develop the property in the near future because demand for new space is still fairly weak, and Pasadena officials are not encouraging large projects now.
The Parsons property was most desirable for its stable rent-paying tenants, said Norris, a principal at Norris Realty Advisors.
“They had to be buying a solid income stream,” he said, “not a shiny piece of real estate. This is an optimistic sign for the market.”
Dallas-based Lincoln has developed more than 100 million square feet of office, industrial and retail facilities and is one of the largest property owners at the Playa Vista development near Marina del Rey.
Morgan Stanley and Lincoln bought an office building at 6500 Wilshire Blvd. in Los Angeles for $182 million last September.
Parsons is one of the world’s biggest engineering firms. Its projects include a $737-million renovation of the Tom Bradley International Terminal at Los Angeles International Airport, the $4.5-billion upgrade of the Pentagon and construction of a $10.5-million mock village at Ft. Irwin near Barstow to test new equipment that detects improvised explosive devices.
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