Ocean West Capital Properties may not purchase a property every year, but when it does, it pays. Over the last five years, Ocean West has bought some $500M in value-add properties and sold about half of them, generating an average ROI that hovers around 30%. We caught up with Ocean West principal Russ Allegrette this week to chat about the company’s run. You can hear more from Russ at Bisnow‘s Los Angeles State of the Market, Jan. 19, at the JW Marriott at LA Live, starting at 8am.
The company has been busy, as just this past week Ocean West (in a JV with Chicago’s Singerman RE) bought 100 West Broadway Ave (below), a 210k SF office complex in the heart of downtown Long Beach.
Russ tells us Long Beach is quickly emerging as one of the next strong creative office markets, thanks in part to an influx of tech tenants to LA. Russ (here with his family) says Ocean West likes what’s going on in Long Beach, pointing to the increase in residential and retail development in the downtown area.
He believes the limited supply of creative office space combined with outstanding location puts 100 West Broadway at “ground zero” in the city. With such amenities as operable windows and outdoor gathering areas already in place, the recent purchase highlights two core components of Ocean West’s strategy—great location, and in Russ’ words, “great bones” suited to the entertainment/technology creative office niche.
Since founding Ocean West in 2010, Russ and his team have been carefully selecting and successfully developing SoCal’s emerging creative office real estate market. In 2011, Ocean West bought Tribeca West, one of LA’s most prominent entertainment office complexes (tenants included Disney, HBO and NBC studios), for $58M, brought in new management, re-tenanted the building and successfully repositioned it for purchase in 2012, when Kilroy paid $73M.
Additional properties purchased in Playa Vista and Westwood showcase Ocean West’s strategy for the creative office market. “These two buildings had no creative office space before we bought them,” Russ remembers, but “the bones were good.”
Russ, originally from Rolling Prairie, ID, graduated from Notre Dame, moved to SoCal and his career has been off and running ever since. He got his taste for real estate working for a bank in the REO department and the large real estate loan department. From there, he moved on to real estate consulting at KPMG, loan sales and debt placement with Eastdil Secured Capital, and finally on to a stint as president of Maguire Investments before starting Ocean West.
Russ’ partner, Troy Miller (principal at OW), was previously managing director at Nomura Securities, and Russ tells us he originates, underwrites and negotiates loans that keep the lights running at Ocean West.
Ocean West takes on a limited number of deals focusing on only those that have the exact characteristics the firm desires. Russ says the investment side strategy is simple: “We don’t go outside of our market, only buy office and residential properties, stick to what we know and be the best in class at it.”
Looking ahead, Russ emphasizes that Ocean West will continue to be selective in its dealings but will seek to participate in and take advantage of the continued growth driven by tech-based tenants. One area of focus will be housing the growing tenant population of Silicon Beach.
When it comes to his off hours, Russ shifts from sniffing out the next best creative office space to finding creative ways to have fun with his family. With four kids, he and his wife keep moving any way they can —running 5Ks together, shooting hoops, spiking a volleyball, you name it. If it’s sports-related you can count them in.