An office building near Los Angeles built more than five decades ago that looks like a structure from ancient Mesopotamia may soon break the record for the highest sales price in a federal property auction.
The latest offer for the Chet Holifield Federal Building and its accompanying 92 acres in Laguna Niguel, California, stood at $176.4 million as of Tuesday afternoon. The auction has been running since June, however, and the U.S. General Services Administration extends the deadline every time a new bid is received. Since the GSA accepts new bids in increments of $300,000, dozens of bids had been submitted through Tuesday.
Potential buyers are vying for one of the most distinctive buildings in Southern California. The architect was the same person who designed the Transamerica Pyramid tower in San Francisco.
At $176.4 million, it would be the highest price for a property auctioned by the GSA since 2016, according to the agency’s records. A group of buildings in Menlo Park, California, formerly occupied by the U.S. Geological Survey, fetched a bid of $120 million in August 2022 but it's not clear from GSA records whether a sale of the property closed. GSA spokeswoman Mary Simms declined to comment on the Menlo Park property.
The identity of the winning bidder for the 1.1 million-square-foot Chet Holifield building in Laguna Niguel won't be known until deeds are filed with Orange County, California, Simms told CoStar News. And the auction appears to have no end in sight.
The property is being marketed as a redevelopment opportunity and one local commercial real estate expert thinks that the bidders likely have no interest in preserving the structure.
"Whoever buys it is going to tear it down," Edward Coulson, director of the Center for Real Estate at the University of California, Irvine, predicted in an interview with CoStar News.
The auction comes as the GSA, the federal government’s landlord, is in the process of unloading unwanted buildings across the country to save money. The GSA is selling properties or letting leases lapse on offices, military buildings, undeveloped land and other property types.
At the same time, the GSA is still developing new properties. In August, it awarded a $524 million contract to Clark Construction to build a new Washington, D.C., headquarters for the Cybersecurity and Infrastructure Security Agency. The GSA is also pursuing a potential development of a new FBI headquarters in Maryland, though House negotiators this summer rejected a $3.5 billion request for the project.
Redevelopment potential
The Chet Holifield building, or Laguna Ridge as the GSA calls the complex, is "a unique development opportunity" and one of the largest land parcels available within highly desired South Orange County, according to the agency's site description.
“Surrounding uses include a mix of retail, small office, and residential uses,” the GSA says. “Major employers within one mile of the property include Costco, Walmart, Home Depot, and Kohl's.”
The Orange County office market's vacancy rate has declined 100 basis points to 12.5%, compared to the first quarter of 2024, according to CoStar data. Office utilization rates have also improved, recovering almost to pre-pandemic levels.
The Chet Holifield building and its surrounding uncovered parking lot and several maintenance and security buildings should be redeveloped to meet Orange County's demand for new housing, retail and office, said Kerry Vandell, a professor of finance and economics at UC-Irvine, who has studied the property.
"The land is too valuable to permit its continued use as simply an outdated, inefficient office building and a parking lot," Vandell told CoStar News.
Modernist architect
The Chet Holifield building was designed by architect William Pereira, known for his modernist and brutalist works, such as the Transamerica Pyramid tower in San Francisco, some buildings on the campus of Pepperdine University in Malibu, California, and the Pacific Life building in Newport Beach.
The design of the Chet Holifield building is loosely based on the concept of a ziggurat with successively receding levels and terraces, a type of building that emerged in ancient Mesopotamia and Babylon. The exterior is painted in a pale-yellow hue and is made from "angled, painted, precast pebble-textured concrete," according to the GSA auction documents.
The Chet Holifield building is "distinguished by weighty, massive forms; rough, exposed concrete surfaces; broad, expansive wall planes; and recessed windows," the GSA says in one document.
The building opened in 1971 as an office for Rockwell International and the federal government bought it in 1974. It currently houses offices for the GSA, U.S. Citizenship and Immigration Services, the Internal Revenue Service and Homeland Security Investigations. Those agencies are scheduled to move out by the end of 2024 and relocate elsewhere in Orange County, though Simms declined to identify the locations.
If the winning bidder plans a demolition, the GSA will require the new owner to provide funds for the preservation of other notable historic properties to mitigate the loss of the Chet Holifield building, according to terms of the auction.
The owner could also qualify for federal historic-preservation tax credits if they decide to keep the structure and renovate it, according to the GSA.
This article was updated on Oct. 23 to clarify that William Pereira was the building architect.