A Riverside office building that has never been used since it was completed four years ago will be the home of the University of California's consolidated payroll and human resources operations, it was announced Monday, Nov. 5.
UC has closed escrow in a building in the Meridian Business Park known as the Riverside Intellicenter, according to a statement. The building, which was built with a full array of energy-efficient features, will employ about 140 employees to start and eventually as many as 500.
The building was purchased from a Dallas-based developer for $17.5 million, said Kris Lovekin, director of media relations at UC Riverside. The purchase was financed, and UC hopes repay the loan through cost savings and from medical center revenues and other sources, Steve Montiel, a UC spokesman for the office of the UC president, said in a statement.
The building is at 14350 Meridian Parkway on land managed by the March Joint Powers Authority. The university announced in May that it would find a centralized location for its payroll and benefits operations, which is called the UCPath operation, and that it had selected Riverside as the city for that location.
The university plans to occupy only the third floor of the 150,000-square-foot, three-story building and expects to take up residence in May 2013. The other two floors will be available for lease, and in its statement UC said that rent from tenants, along with the building's energy savings, will allow the university to recoup the purchase price in 11 years.
The building was sold by KDC Real Estate Developments and Investments, which built a string of six green, environmentally certified office buildings across the country branded as Intellicenters. The projects were built on spec, meaning they were financed and constructed with no commitments from tenants, and today entities that include Morgan Stanley, Daimler-Chrysler and the University of Georgia are located in these buildings.
But the Riverside Intellicenter was a victim of bad timing, because it was completed in the year the region's economy dried up. No company wanted to commit to a major move during the recession.
That economy, however, probably played to UC's favor, because a building that has generated no revenues for its owner for four year's creates a buyer's market, said Tom Pierik, senior vice president at the Riverside office of Lee & Associates, the commercial real estate firm that helped broker the deal. It would probably cost a developer twice as much to build a brand new Intellicenter-Riverside today.
"It's an excellent deal for UC," Pierik said. "They were able to get 50 percent below reproduction value, and they're buying into an improving market."
UC will eventually look for tenants to use the space UCPath will not need, and the vacancy rate for larger buildings with full amenities in the Inland area was close to 24 percent right now, according to an October report by the Ontario office of Marcus & Millichap.
That vacancy rate has been slowly coming down, and Pierik said other entities have shown interest in the Meridian Business Park area. That could give UC some momentum when it goes after tenants, he said.
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