Deal May Mark New Low for Office Prices : Real estate: Bank of Boston sells for $3.6 million--or $51 a square foot--a building it had foreclosed on near John Wayne Airport.

NEWPORT BEACH — A Boston bank has sold the second of two office buildings on which it foreclosed in 1991, a deal that one real estate broker said set a new low for local office prices.

The three-story building not far from John Wayne Airport sold for $3.6 million, or $51 a square foot. Had the building been fully leased instead of less than half full, it would have sold for about $81 a square foot. Either number is far less than the average $156 a foot that smaller office buildings were selling for in the late 1980s, according to CB Commercial Real Estate Group Inc.

“Who knows if we’re at the bottom of the market?” asked Joseph A. Leon, a broker at CB, which handled the sale. “But this price sets a benchmark, and in the next few months we can tell whether we’re bouncing off the bottom.”

The same bank’s sale, reported earlier, of an office building next door set a new low for bigger, fancier buildings. When Boston pension fund adviser T.A. Associates bought the nine-story office tower in May, it paid $13.7 million, or $73 a square foot.

Had it been full of tenants instead of only half full, the building would have sold for $92 a square foot. In the boom years of the mid-1980s, such a transaction would have been worth an average of $228 a square foot--more than twice last month’s figure.

Both buildings opened in 1989, just as the real estate market was going sour. With competition from dozens of other office buildings, the project had a hard time finding tenants.

The developer, McLachlan Investment Co. in Newport Beach, borrowed the money for both buildings from the Bank of Boston. The bank foreclosed on both buildings in January, 1991.

After the foreclosure, the buildings lingered on the market for more than a year before being sold. The deals were completed in June.

Bank of Boston would not say how much the bank and the developer lost on the sale. It did say that the buildings “were on the market more than a year, and their value had decreased substantially. We sold the property for what it was worth.”

McLachlan did not return a phone call Monday.

One bright spot is for the buyer of the smaller building: Glidewell Laboratories, a maker of dentures. The company, which has annual revenue of about $12 million, will move its headquarters from Orange to the new building.

“They’re a classic example of the kind of users who are driving this market,” CB broker Leon said. “They’re finding that, at $51 a square foot, it’s cheaper to buy a building than to lease one. That’s less than industrial space used to cost. So a lot of them are becoming owners.”

Glidewell will occupy about half of the building’s approximately 71,000 square feet and lease the rest.

Still, selling the buildings wasn’t easy, according to CB: Deals fell through three times as buyers worried that the market would continue to decline.

The bank continued to lower its price, and eventually the brokers got a dozen offers.

With most of California’s major banks sitting on commercial property on which they have foreclosed, it’s only a matter of time, Leon said, until more buildings come on the market, probably in the next six months.

In anticipation, he said, buyers have already moved from Texas, where the real estate crunch hit in the mid-1980s, and New England, where the market went downhill rapidly in the late 1980s, to cruise Southern California for deals.