Sign of the Times: Major Office Sites for Sale : Trends: The honeymoon may be over for some owners in Los Angeles and Orange counties. They want to be more liquid.

Looking to buy an office building? ‘Tis the season, with more than 25 major office properties in Los Angeles and Orange counties being offered discreetly to anybody with money and strong nerves.

A sampling includes 50% of the First Interstate Tower in downtown Los Angeles, Miracle Mile’s CalFed Building, Great Western Headquarters Center in Beverly Hills, the ABC Entertainment Center in Century City and Warner Financial and Medical Plaza in Woodland Hills.

Increasingly, commercial real estate investors are starting to worry that the honeymoon they’ve had with Southern California for eight years is about to end.

“The time has come for a shake-out,” predicted Ehud G. Mouchly, a principal at real estate consultants Kotin, Regan & Mouchly Inc. of West Los Angeles. “A lot of my clients who own real estate are nervously phoning me these days. They want to be more liquid.”

“There’s no question we’ve had an unsettled market since early summer,” observed Andrew Kane, director of Arthur Andersen & Co.’s western real estate consulting practice. “Every building in downtown Los Angeles is for sale . . . at the right price,” he quipped.

--VMS Realty Partners is quietly offering some of its about 20 local office buildings for sale as it struggles with recently disclosed liquidity problems and a major management shake-up.

The Chicago-based investment company holds two high-rises in Westwood, an Encino medical building, 9911 Pico Boulevard and several offices along Wilshire Boulevard in Beverly Hills, including the Bank of America Building.

Most of these properties have been on and off the market several times in the past three years. VMS said it is only actively selling a handful of its assets. Several local brokers, however, report that anything and everything is for sale.

VMS executive Dennis H. Hope called it “repositioning.”

--Pacific Financial Group of Beverly Hills is selling eight prime office buildings as its four partners split after more than a decade of deals.

Offerings include Pacific Corporate Towers in El Segundo, Redstone Plaza in Newport Beach, Panorama City’s Panorama Towers and Westwood Medical Plaza. Selling this month by the group are the Gibraltar Savings building at 9107 Wilshire Blvd. in Beverly Hills and 9100 Sunset Boulevard. Daishin-Kyouritsu Co. of Japan paid a reported $34 million for its Wilshire purchase, while the Sunset property fetched a reported $29 million.

ABC Entertainment Center and Warner Financial & Medical Plaza--both owned by Pacific Financial--are close to selling too, say local real estate resources.

--Columbia Savings & Loan is reportedly looking to liquidate its investments in joint ventures with the Koll Co. in Orange County. Columbia Development Partners--a joint venture that includes the Beverly Hills-based savings and loan--would neither confirm nor deny rumors that it is looking for an infusion of more than $100 million to complete several office buildings in Beverly Hills known as the “Masterpiece Collection.”

--In Irvine, The Atrium on Von Karman Avenue is being offered for $90 million and the nearby Tower 17 is priced at $60 million, say local brokers.

--Anaheim City Center is for sale at $30 million and Winthrop Financial of Boston is offering its share of Irvine’s Park Place.

--In Santa Ana, locals report, Xerox is looking to pull out of its investment in the Birtcher Xerox Center.

--Buyers interested in downtown Los Angeles may choose to take a 50% interest in the 62-story First Interstate Tower being sold by First Interstate Bancorp, Linder Plaza on 6th Street being sold by Pan American Properties or 911 Wilshire Boulevard, being by offered by Cabot, Cabot & Forbes.

Part of a $500-million West Coast portfolio being offered by the company is 911 Wilshire, as investor Marshall Fields V seeks to reduce his real estate holdings. Other notable Cabot, Cabot & Forbes properties include the 60-acre Lost Hills Business Center and San Diego Corporate Center.

--The Mid-Wilshire/Miracle Mile area is reportedly offering such picks as 3810 Wilshire and the CalFed Building at 5670 Wilshire Blvd.

Why are so many buildings for sale at one time? It depends on who you ask.

“The only way you can make money in office buildings today is to sell,” said Martin Morgenstern, a director at Cushman Realty in Newport Beach.

Prime office space in Orange County costs about $200 a square foot--including land and development expenses, he said. Effective monthly rental rates, however, are about $1.65 a square foot. That works out to a net return rate of less than 7%.

“Economically,” Morgenstern said, “it doesn’t work. How long can you hold a $50-million to $80-million building with so low a rate of return?”

Indeed, the more prestigious a building and the better its location, the worse its cash flow in most cases. Many developers and institutional property owners are not willing to hold on to an investment just for its appreciation. What they need for debt service and maintenance costs is cash.

Jack Rodman, managing partner in the Century City office of accounting firm Kenneth Leventhal & Co., is advising his clients who own office buildings that “they might want to give serious consideration to a sale.”

“It’s the best and worst of times for commercial real estate,” Rodman said. “We’re seeing the highest sales prices in the history of the city.” At the same time, however, “it’s a tenant’s market.” Several parts of Los Angeles and Orange counties are overbuilt, he said--creating high vacancies and low rates of return.

Most of the sellers have their own reasons for selling, Rodman said. Some need the cash, others prefer to invest in other parts of the country. And many syndications formed in the early 1980s to take advantage of tax breaks are now finding that the new tax laws now make certain investments untenable. New capital requirements for savings and loan institutions have also started to spur sales, he said.

As 1990 approaches, few observers are willing to predict what will happen when even more buildings begin to sport “For Sale” signs.

Said Rodman: “It all depends on the economy.”

Galperin is a Los Angeles-based free-lance writer who has covered the commercial real estate scene for several years. News releases and column inquiries should be mailed to 8306 Wilshire Blvd., No. 7078, Beverly Hills, Calif. 90211.