DivcoWest Real Estate Investments and Edgewood Realty Partners sold a Northeast Pasadena office building on Tuesday at a significant profit, The Real Deal has learned.
The partners sold the two-story, 239,000-square-foot building on 9.6 acres of land at 465 North Halstead Street to EverWest Real Estate Partners for just under $67 million, sources said.
They paid only $36.25 million for the property in 2013, and completed a $5.68 million renovation which included extensive interior and exterior improvements. Approximately 72 percent of the building’s space now features open floor plans that accommodate large and medium-sized tenants.
The $280 a square foot price is not on the high end for Pasadena, but it is for Northeast Pasadena, which doesn’t get the kind of pricing you see near the Rose Bowl.
Kevin Shannon, Ken White, Rob Hannan and Sean Fulp of Newmark Grubb Knight Frank represented Divco, along with Kevin Duffy and Natalie Bazarevitsch of CBRE.
The property was only 42 percent leased when the partners bought it, said Shannon, who also represented the seller, Broadreach Capital Partners, in the 2013 sale.
The building is now 89 percent occupied by tenants that include the corporate headquarters of Community Bank as well as companies such as OE Waves and PNC Bank. Divco and Edgewood, who purchased the property as a value-add acquisition, had planned from the jump to lease it and sell it, Shannon said. EverWest will now look to lease the last remaining space at the property, he said.
Giant Magellan Telescope Organization, the builder of the world’s largest land-based telescope, was the latest tenant to sign at the building. It took 46,000 square feet, moving from a smaller space on Lake Avenue in Pasadena’s CBD, Duffy said.
The property is underwritten at $2.75 a square foot a month rent, he said. Class A high rise properties in Pasadena average $3.14 a square foot a month, while high-end properties in the city’s CBD can can fetch between $3.50 and $3.45, he said.
“Northeast Pasadena is a lower cost alternative for (tenants) who want larger footprints,” Duffy said.
Nearly 44 percent of the new leases signed in Pasadena since 2015 have been by financial services firms, according to CBRE data.
“Particularly engineering, healthcare and technology firms have been great sources of strength in Pasadena, vacancies are low and Class A rents keep climbing,” Duffy said.
One of the most notable recent transactions in the area was the March sale of the Pasadena Towers to CBRE Global Investors for $250 million or roughly $540 per square foot, as The Real Deal first reported.