Surlamer Investments Acquires City Plaza Office Building

Newport Beach – Surlamer Investments, a Newport Beach-based investment firm, has acquired the City Plaza office building for $18.5 million, marking a significant low in office property transactions within Orange County. With this purchase, the sale price translates to approximately $51.51 per square foot, positioning it as one of the most economical deals for an office building in the region in recent years.

City Plaza, a 19-floor structure, was only 14% leased at the time of sale, indicating considerable vacancy in the property. The building, which boasts a total area of 369,134 square feet and occupies 11.3 acres, is strategically located near the intersection of Santa Ana (5), Garden Grove (22), and Orange (57) freeways, adjacent to The Outlets at Orange.

Surlamer Investments acquired City Plaza from TPG Capital LP, which had taken over the building in early 2024 due to foreclosure. TPG Capital received City Plaza following a default by previous owners Greenlaw Partners and Walton Street Capital on a $64.2 million debt obligation.

Details of the Acquisition

Current tenants of City Plaza include Core Law Group, Courier Insurance Services Inc., and United American Insurance Co. Notably, CoStar has described City Plaza as a “landmark” office building, indicating its historical and architectural significance. In contrast to other recent transactions, the purchase price of City Plaza is strikingly low. For instance, entrepreneur Joe C. Wen purchased a Newport Beach office tower earlier in April for $106 per square foot. Similarly, H&S Ventures LLC acquired the Stadium Tower for $72.9 million or $275 per square foot.

Market Context

The current office market in Orange County has shown considerable variance in property values, with other notable transactions this year pointing to high per-square-foot prices. For example, the Irvine Community Land Trust paid $380 per square foot for a 70,000-square-foot office building, while Eagle Hua Inc. bought a Mission Viejo office for $336 per square foot.

About Surlamer Investments

Surlamer Investments specializes in wealth management, managing a portfolio that includes private companies, publicly-traded securities, and real estate. The firm was founded by Fariborz Maseeh, an entrepreneur known for selling a computer chip company for $750 million. In addition to the City Plaza property, Surlamer Investments owns a medical office building located at 17861 Von Karman Ave. in Irvine, purchased in 2010 for $17.3 million, equating to $392 per square foot.

A Brief History of City Plaza

City Plaza was originally constructed in 1969 and underwent renovations in 1999. It has seen significant fluctuations in occupancy over the years; prior to its acquisition by Greenlaw Partners and Walton Street Capital in 2013, the property was 94% occupied. However, after the acquisition, the new owners defaulted on their loan, leading TPG Capital to take possession via a deed in lieu of foreclosure.

The acquisition of City Plaza by Surlamer Investments raises questions about the ongoing trends in the Orange County office real estate market, particularly regarding opportunities amidst higher vacancy rates and lower prices.