Watermarke Properties pays $23M for office building in Orange

Watermarke Properties has bought a 150,000-square-foot office building in Orange for $22.5 million, with plans to turn it into 360 homes.

The Corona-based developer led by Jeff Troesh acquired City Centre I, a four-story office complex at 625 The City Drive South, the Orange County Register reported. The seller was not identified.

The company plans to redevelop the barbell-shaped building on 6.8 acres beside the 22 Freeway and the Santa Ana River into a mixed-use apartment or condominium project. 

Newmark, which represented the building owner, said Watermarke is pursuing approvals for 360 housing units at the site. It’s not clear if it plans to raze the 1990-built offices and redevelop the site, or if it aims to convert the offices into homes a few blocks from the Outlets at Orange mall.

“City Centre I was an attractive covered-land play in central Orange County that received strong interest from a wide range of buyers and capital sources,” said Paul Jones, an executive managing director at Newmark. “The existing asset offered in-place cash flow, while the buyer secures entitlements for a new multifamily development.”

Newmark said local zoning allows for up to 60 housing units per acre. The ground floor would be reserved for shops and restaurants.

Conversions of offices and indoor malls to apartments has become the latest solution to the state’s housing shortage, according to the Register. In the era of remote work, developers and property owners scrutinize under-used sites for redevelopment.

Local office-to-housing conversions include a two-building campus in Anaheim that will become 83 apartments and another two-office spread in Tustin that will transform into 18 duplexes and four detached homes.

— Dana Bartholomew