Old Town Pasadena is new again for investors seeking office space.
The latest of several recent office property sales in and around the historic district saw the trend extend to one of the most prominent towers in the city when the 12-story, 300,000-square-foot AT&T building was sold for $161.5 million, or $512 a square foot, well above recent averages.
Newport Beach’s Saunders Property Co., led by principal John Saunders, sold the building at 177 E. Colorado Blvd. to Rockpoint Group of Boston.
The price reflected the hot streak for Old Town properties. Saunders acquired the property from AT&T Inc. in early 2014 for $81 million, half of this month’s sale price, a yield driven by a combination of upgrades and the business district’s increased popularity.
Other recent office building deals in the area over the past year include the Ameron Center at 245 S. Los Robles Ave. in August 2016 for $40.5 million; the six-story 200 S. Los Robles property for $46 million in February; and the seven-story, 1928-built 16 N. Marengo Ave. building in March for $15 million.
The corner of Lake Avenue and Colorado to the east was once prime office territory in Pasadena, Saunders said, the Old Town’s long-established status as a hub of trendy shops, restaurants and bars has more recently made it a hot spot for employers.
“People hiring young people, they’re all going to Old Town now,” Saunders said.
It’s even added value to properties in adjacent areas, such as the AT&T building, just east of Arroyo Parkway.
“This is not in Old Town, but it’s next door,” Saunders said. “When this became available, I had to have it.”
Saunders’ team spent $30 million refurbishing the 44-year-old site. AT&T, which owned the property before Saunders, leased back 40 percent of the building after the acquisition, and the remaining space was taken by 10 new tenants.
Saunders’ firm was the winner among 50 bidders.
“It’s a transaction we kind of wanted to do,” he said. “I owned several properties in Pasadena, and I always like Colorado Boulevard. Before I moved to California, I lived in Kentucky and would watch the Rose Parade, and the chance to own a building on a whole city block on the parade route was wonderful.”
The location had other benefits as well, according to Saunders’ team.
“The building has, without any question, the best view in Pasadena,” said Saunders partner Jeff Parker. “Unobstructed in most directions, it overlooks City Hall, and we felt it had a great deal of potential if it was rehabbed correctly. We were very careful about how we rehabbed it and we tried to make it as up to date as possible.”
Among the challenges Saunders Property took on was a rundown open plaza at one end of the building.
A 7,000-square-foot Fleming’s Prime Steakhouse and Wine Bar was built and opened on the plaza area at Colorado and Marengo Avenue in October of last year.
“We approached the city about moving the courtyard and putting in a free-standing restaurant there, and we were quite surprised they liked the idea,” Parker said. “They wanted to revitalize the area, and they considered the courtyard to be an eyesore. They called it a failed public space. Fleming’s has a great location – possibly the best location in Pasadena. Marengo goes up to the freeway, and the Rose Parade goes by (the restaurant).”
Irvine-based architectural firm Ware Malcolm led the design team for the refurbishment, working on the lobby and helping plan the repositioning of the property. River Rock Real Estate Group of Newport Beach provided both property and construction management services.
Among the tenants in the building since Saunders’ 2014 acquisition are iRobot; WeWork; Hot 8 Yoga; and Primecap, an investment management company that occupies the top floor.
“They did a really fantastic job of upgrading the structure and a nice job of leasing full floors to great tenants,” said Eric Duyshart, economic development manager for the city of Pasadena. “Between iRobot, the headquarters for a cosmetic company, some money managers and, of course, We Work, it’s a great set of tenants that ultimately saw the value of being near the amenities of Old Pasadena and being close to a light-rail station.”
Duyshart said Saunders’ improvements to the building have made for a nice pedestrian connection between the civic center and Old Town Pasadena.
“There was always one dark block and the building didn’t have a great pedestrian front,” Duyshart said. “Saunders helped reinvigorate the northern side of Colorado, adding light, Fleming’s and ground-floor tenants. Now it’s more of an engaging urban space.”
Eastdil Secured, based in New York, represented Saunders and Rockpoint in the AT&T building transaction. A representative from Rockpoint declined to comment.
