Hollywood-based multifamily developer The Cornerstone Group is venturing outside its wheelhouse with an office property investment north of Orlando Fashion Square mall, paying $6.483 million for two buildings that offer value-add potential now, and could be removed for future expansion of an apartment complex it's building next door.
Located at 3660 and 3670 Maguire Blvd., the 6-acre property features the Corporate Park I and II buildings with a combined 87,000 square feet of conditioned area.
The site lies directly west of 15 acres Cornerstone bought in July 2017 north of the mall, where it's now pouring concrete slabs for a 361-unit multifamily project with vertical construction to start next week on 11 four- and five-story buildings.
"We love this office property location, believe it's a logical connection to Baldwin Park and bought it knowing we had value-add upside. We usually don't go out of our area of expertise, but saw the long-term potential," Bill Kassebaum, Cornerstone's senior vice president for acquisitions and development, told GrowthSpotter on Thursday.
"Our intentions now are to lease them up, maybe do some work on them ...," he continued. "We don't have a firm plan to redevelop the site now, our play is to have a mix of office and multifamily there together for people."
Cornerstone is looking for office lease deals of one to five years with up to 14,000 square feet available, said Robert Kellogg, executive managing director with Colliers International, who leads leasing for the buildings alongside Todd Davis and Colin Morrison.
That max space of 14,000 square feet was part of what Kimley-Horn vacated last year when it moved its local office to downtown Orlando's The Plaza tower.
Kimley-Horn left the space in a near-turnkey state, Kassebaum said. He considers the space at $16 per square foot a bargain for startup businesses that want to lease near downtown Orlando and Baldwin Park.
The seller was MMM Lakewood LLLP, long-time land owner of the 67 acres under Fashion Square mall and the two office buildings. It's a family limited partnership tracing back to the McCrory, Maguire and McCullough families, each of which make up six general partners that now manage it.
"We asked (Cornerstone) what their intentions were, and we liked the answer we got that it was essentially a future Phase 2 of their apartments," said local eminent domain attorney Raymer F. Maguire III, who directs one of the general partner business entities. Local accountant Lou Lauteria manages the land lease for Maguire and the other five general partners.
"We felt it was a positive for the property and for our remaining holdings of Fashion Square mall," he added.
MMM Lakewood received roughly $500,000 per acre, or $3 million overall. The other approximately $3.48 million in the total price went to an UP Development affiliate for selling its leasehold position on MMM Lakewood's land, which gives Cornerstone rights to the buildings above ground.
Cornerstone's multifamily project will be named "Urbon Apartment Homes," with delivery of a first phase of units in February 2019 and completion by October 2019, Kassebaum said.
Prior to buying the multifamily site last year, Cornerstone acquired the finished plans and development interest for an undisclosed sum from Trammell Crow Residential, which previously led it through city permitting for 356 units.
After taking control, Cornerstone modified those plans to boost the unit count to 361, in part by dewatering a stormwater pond on site and rerouting that drainage to new ponds, Kassebaum said. Two of the 11 buildings will also be built podium-style, with at-grade parking underneath to maximize space.
Looking forward, Kassebaum anticipates at least one of the Corporate Park office buildings staying in place through 2025 because of long-term leases.
"It's not in our mind to redevelop the 3670 building for now, we like the tenant base in there," he said. "If we'd do something it would be with the 3660 building. If multifamily (demand) is still going the way we believe it will for the next three years, we'd give redevelopment consideration there."
Cornerstone has previously focused on affordable housing development in South Florida, with more than 60 apartment and condominium projects. This will be its Orlando market entry and first market-rate apartments project in Florida.