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Property investment firm Harbor Associates has managed to pull off an increasingly rare feat in the post-COVID world, particularly in Southern California: a profitable office portfolio sale.
In a joint venture with Taconic Capital Advisors, the Seal Beach, Calif.-based company sold 451 East Vanderbilt Way in San Bernardino, Calif., late last week for $26.8 million, Commercial Observer can first report. The property, a 115,520-square-foot Class A office building, is the third and final transaction involving the partnership’s five-property portfolio. The partnership sold the property to San Bernardino County, which has been leasing two of the building’s floors.
The joint venture acquired the 368,000-square-foot portfolio in October 2019 for $41.7 million. All five properties are at the Tri-City Corporate Centre, a 153-acre mixed-use office park. Following some renovations, including a new roof, elevator improvements and a renovated lobby, the partnership began breaking apart the portfolio to sell the assets individually.
“Particularly post-COVID, many institutions have largely turned their backs on office,” Harbor Principal Paul Miszkowicz told CO. “So in order to get the best pricing, you need to break offices into smaller denominations. After COVID hit, it became really clear that we’d have to break the portfolio apart.”
That breakup started in late 2021, when the partnership sold 301 East Vanderbilt Way to Davenport Partners for $8.9 million. It later sold 621, 625 and 685 East Carnegie Drive in a single transaction to an undisclosed seller in November 2022 for $34.2 million.
All told, the portfolio sold for $69.9 million — a profit of $28.2 million, not including renovation costs. CBRE (CBRE) advised the partnership in the sales.
“The Inland Empire is really understated as a market, even though it’s one of the healthiest markets in Southern California,” Miszkowicz said. “A lot of that has to do with population, job and affordable housing growth in the area, but at the same time there’s been very minimal office construction there in the last 15 years. That created an opportunity for us.”
Harbor has made other office moves in Southern California in recent months. In December, the company acquired Westwood Terrace, a five-story, 164,683-square-foot office building in Westwood, for $44.7 million in a joint venture with F&F Capital Group. That partnership also acquired a 102,000-square-foot industrial portfolio in Carlsbad, Calif., north of San Diego, in November for $21 million.
Nick Trombola can be reached at NTrombola@commercialobserver.com.
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