John Hancock Grows OC Office Portfolio

By Gail Kalinoski, Contributing Editor

John Hancock Real Estate is boosting its presence in the O.C. with the acquisition of 5000 Birch, a Class A, two-building office property in Newport Beach, Calif., and its third office asset in the hot Orange County market.

John Hancock Real Estate, the U.S. division of Toronto-based Manulife Financial Corp., one of the largest life insurance companies in the world, bought the 306,000-square-foot office complex for $104.5 million from an undisclosed seller. The property, located at the gateway between Newport Beach and The Irvine Business Complex, has a 10-floor West Tower and six-floor East Tower.

“We are excited to grow our global portfolio through continued investment in Orange County – one of the fastest growing office markets in the U.S.,” Kevin Adolphe, president & CEO of Manulife Real Estate and Manulife Asset Management Private Markets, said in a prepared statement. “Our acquisition of 5000 Birch strengthens our longstanding investment in California, where we now actively manage over 9 million square feet.”

The firm operates as John Hancock Real Estate in the United States and Manulife Real Estate in other parts of the world. The firm’s global real estate portfolio has $14 billion in assets under management totaling more than 58 million square feet as of June 30. It focuses on prime office and industrial properties as well as select retail and multifamily properties in key metropolitan areas throughout Canada, Asia and the U.S. In addition to the greater Los Angeles area, other key U.S. markets including San Francisco, Chicago, Boston, New York, Atlanta and Washington, D.C.

John Hancock Real Estate already owned two properties in Orange County, both in Irvine – The Michelson, a 19-story, 536,307-square-foot office tower it bought in 2012, and the Oracle Tower, a 12-story, 272,887-square-foot office building acquired in 2014. The Orange County office market has had a strong year so far, with vacancy at about 12 percent during the third quarter, the lowest it has been in eight years, according to Transwestern’s Orange County Office Market Real Estate Outlook report for 3Q 2015. Part of it is driven by the low unemployment rate in Orange County, which was 4.5 percent in August. The report noted Orange County’s rate of employment growth has outpaced the rest of the U.S. and that trend is expected to continue. With positive office market fundamentals and an expanding local economy, investors like John Hancock Real Estate have been active in the region.

“Investment sales activity has increased significantly as investors look for well-located properties that are still relatively less expensive than comparable properties located in Los Angeles,” the Transwestern report noted.

Transwestern stated approximately $523.7 million worth of office sales transactions occurred in Orange County during the third quarter. One of those properties was One Newport Place, also in Newport Beach, that changed hands for $72.3 million. The highest office investment transaction during 3Q was $121.5 million spent by a joint venture of Hines and PIMCO to acquire the four-building Quintana office campus in Irvine.

John Hancock Real Estate has made several other purchases during the past several months, including the July acquisition of nine office buildings and two multifamily communities in San Diego. In June, the firm made a big splash in Chicago with the acquisition of One South Wacker, a 40-story, 1.2 million-square-foot office tower in the city’s CBD, for $344 million. Also during the summer, John Hancock Real Estate submitted plans in Boston to develop a $350 million, 625,000-square-foot office tower at a site it already owns on Stuart Street in the city’s Back Bay section.