Walgreen Plans to Open Store in Closed Tower Records

Orange County Business Journal, Sep 3-Sep 9, 2007 by Mueller, Mark

Sushi Maker Fuji Foods Moving to L.A; Investor Radius Investments Makes First Local Buy

REAL ESTATE

It wasn't until the doors were locked and the music turned off that Walgreen Co. started shopping at Tower Records.

The drug store operator bought Costa Mesa's distinctive 10.837-square-foot Tower Records building-which was a roller rink years ago-in late August for $9.7 million.

Walgreen plans to open a store in the Superior Avenue building, a result of Tower Records' bankruptcy liquidation late last year.

Despite the bankruptcy, Walgreen did not get a bargain-bin sale price. At $900 per square foot, it's a record for a Costa Mesa retail property, according to brokers for the Newport Beach office of Grubb & Ellis Co.

It's also a steep increase in price for the vacant building, just off the Costa Mesa (55) Freeway on the way to the beach. When the Business Journal last year talked to Peter Dunkel, the property's prior owner, he estimated the building's value at $7.5 million.

Dunkel bought the site in early 2006 for a reported $5.5 million. Tower Records had been paying about $30,000 a month in rent for the store near Triangle Square. It had been one of the most profitable stores in the Tower Records chain, Dunkel said.

Costa Mesa officials said Walgreen, or any big retailer looking to remodel the building, should be able to get the necessary city approvals for the project since the site likely will keep the same parking requirements. The only potential issue for the pharmacy might be getting a license to sell alcohol.

That's a better outcome than what Walgreen faced in Brea, another city where the company targeted a former Tower Records store for a pharmacy earlier this year.

The music chain's store in Brea was custom built for Tower. Its two-story layout wasn't that of a typical Walgreens. So the company wanted to divide the space into three stores. Brea city officials blocked the move in court. As of this month, a decision on the property's next tenant still is unknown.

Ryan Gallagher and Michael Randall of Grubb & Ellis represented the seller in the Costa Mesa deal. Richard and Scott Landess of Strategic Properties Inc. represented Walgreen.

Fuji Foods Relocating

Finding fresh sushi in Anaheim just got a little harder.

Fuji Food Inc., an Anaheim maker of ready-to-eat sushi, just signed a 10-year lease for a 91,189-square-foot warehouse and office building across the Los Angeles County line in Santa Fe Springs. The lease is valued at $10.3 million.

The family business, formed in 1990, plans to move its headquarters from its North Armando Street site to Santa Fe Springs, according to officials with the Irvine office of Voit Commercial Brokerage LP.

Voit's Mike Hefner and Mike Cargile represented Fuji Food in the lease. Eric Moore of Transwestern Commercial Services represented the landlord. Metropolis Torrance I LLC.

Fuji Food sells its products under the Fujisan name. It started out making sushi for local markets and now delivers to grocery stores, clubs and warehouses, primarily in Southern California. The new warehouse already includes a food-processing facility.

Radius Enters OC

Radius Investments LLC, a Santa Barbara-based private equity real estate investment firm with about $130 million in holdings, has made its first OC acquisition.

Radius bought the Tustin Financial Center, an 85,340-square-foot, two-story office building. The price was $21.8 million, or about $255 per square foot.

The building was built in 1978 for Texas Instruments Inc. and renovated in 2006. Tustin Financial Center is about 90% leased with seven tenants, including Assurant Inc. and Fantastic Sams.

Radius' other real estate holdings are in Los Angeles, Ventura and San Diego counties.

What's in a Name?

When 1 wrote last month that a small law firm in Irvine operating under the Spectrum Law name signed on as one of the first tenants for The Irvine Company's office development at 20 and 40 Pacifica in the Irvine Spectrum, it caused a bit of confusion.

The law firm-which currently operates out of Irvine Co.'s Park Place complex-has a popular name. I got a call from Spectrum Law Group LLP. a different finn in Irvine located about a mile away at 1900 Main St. They'd like their clients to know they're not moving.

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