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Tuesday, Nov 28, 2023

Ready to Give At Offices

When Steve Zimmerman shelled out more than $11 million for the Mission Oaks Technology Center in Camarillo several months ago, it wasn’t for the property as it stands today. Instead, Zimmerman and his ZDI Inc. in Santa Monica made the buy on potential. After all, the more than 265,000-square-foot office park is almost entirely vacant, with payroll service firm ADP LLC as the sole tenant, leasing about 18,000 square feet. The sale from LBA Realty LLC of Irvine closed quietly in March, a few months after Zimmerman took a flyer on getting part of the property zoned residential. The Camarillo City Council was vehemently opposed to the idea, but Zimmerman went through with the buy anyway. “This is an absolutely amazing piece of land,” Zimmerman said. “It takes someone who wants to invest the time, effort and money to make it work, and I have that ability. The fact that it’s vacant doesn’t bother me.” The 20-acre park at 5151-5155 Camino Ruiz, which has four different buildings, has strong visibility along the 101 Freeway. And Zimmerman plans to use that visibility for his first move to reposition the property. The developer said he is working toward dividing the park into more than one parcel, allowing him to sell off pieces. Of most interest are the twin 40,000-square-foot office buildings visible from the freeway. Zimmerman said if he can get those two buildings set up as individual parcels, it might be easier to attract an owner/user who wants to get its name on the building. “There’s just nothing like this available in this marketplace,” he said. “There’s access to retail close by and residential. These are great buildings, they just need some work.” And that’s the catch. Zimmerman has a lot of work to do before the property is ready to go to the market. Even before parcel designations mean anything, the park needs some significant infrastructure work. The two office buildings, along with two manufacturing buildings, one with 111,000 square feet and the other at 75,000 square feet, have all the infrastructure such as water and power running from a single room in the larger manufacturing building. The developer plans to install all new lines for each building, but is holding off on the work until the parcel situation is resolved. There’s another thing working against the developer: Camarillo. The city is an incredibly weak market, even within the generally soft Conejo Valley market, which had 17.6 percent office vacancy in the first quarter, according to the L.A. office of Colliers International. “The Camarillo market, even in the best of times, has struggled,” said Brian Hennessey, senior vice president at the Encino office of Colliers. “This is one of the better parks out there, but you’re still in Camarillo and those market fundamentals don’t change.” Property repositioning Zimmerman said his company has about 25 properties in its portfolio, including two L.A. industrial buildings: A 56,000-square-foot building at 405 Mateo St. and a 31,000-square-foot manufacturing building at 330 S. Alameda St. The Camarillo office park was built in 1984 and has had several tenants through the years, most notably in the last decade when health insurance giant WellPoint Inc. of Indianapolis leased up much of the park for a call center and other back-end functions. William Raine, general manager at ZDI, said WellPoint’s exit really changed the market’s perception of the park. “It’s been a ghost town here,” he said. “The buildings are just dated.” LBA picked up the park as part of a portfolio acquisition in 2012 from Kilroy Realty Corp. of Los Angeles. Zimmerman said the costs to rehab the four buildings, including upgrades to the facades, paint jobs and other basic aesthetics, should be about $3 million. However, if he can’t find tenants to lease the two out-of-date manufacturing buildings in the back, he may tear them down, which could swell his investment to more than $20 million. “I have some different ways to approach this thing,” he said. His first, and certainly most lucrative thought, was to tear down the largest building, get a zoning change and construct apartments. ZDI went before the City Council earlier this year and got that shot down by a 5-0 vote. “The city is very much against that,” said John Fraser, senior management analyst with the city. “There is already about 9 acres across the street that is under consideration for residential. Had that not already been under consideration, maybe it would have been different.” The neighboring property at 5000 Camino Ruiz is in escrow after being on the market for nearly seven years. The buyer plans to propose a multifamily project on the site, which would require a zoning change, though Fraser said no formal application has been submitted. Zimmerman said he could go back to the City Council in a few years to propose residential development on the land again. However, he concedes that constructing several smaller industrial buildings where the large manufacturing facilities sit may be the best move. “The ultimate end value for this back building may end up being to start over,” he said. “There’s value here, it’s just going to take time.”

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