Newport Center is getting a run for its money as Orange County’s most expensive place for office space.
The Irvine Company is marketing space at 20-40 Pacifica,its twin office towers going up in the Irvine Spectrum,at monthly rates as high as $4.30 per square foot.
The cheapest space in the 15-story towers is listed at $3.60 per square foot a month, according to the company’s Web site.
The first of the towers is set for completion in late 2007.
The asking rates put the priciest floors at 20-40 Pacifica at levels comparable to the prestigious addresses at Newport Center, the cluster of office buildings surrounding Fashion Island in Newport Beach.
Space at Newport Center, owned partly by the Irvine Co. and home to the company’s headquarters, goes for as high as $4.50 per square foot.
“Irvine Spectrum has evolved into one of the most desirable and prestigious locations in Orange County to work, shop and play, offering many of the outstanding attributes of Newport Center,” Irvine Co. spokesman Bill Rams said.
The average rent for top office space in the county stood at $2.71 per square foot last quarter, according to Grubb & Ellis Co.
Brokers, including those who represent tenants seeking space, had expected average rents at 20-40 Pacifica at around $3.50 per square foot.
The higher rates signal that the county’s dominant landlord is bullish about the local economy, according to brokers.
“The Irvine Co. is a very unique animal, and they’re in a very unique position,” said Royce Sharf, branch manager for the Irvine office of Studley Inc., which represents tenants. “Ultimately, they have the right to charge what they think is appropriate, though not everyone on the tenant side is in consensus on where the office market is heading.”
Some tenants are holding out hope that rents will stabilize, or even decline, in the next year with several office towers going up and downsizing in the mortgage industry, Sharf said.
The rents for the Irvine Co.’s first new office towers in 15 years could have a ripple effect across the county.
Other landlords are likely to follow suit with rent increases as leases come up, according to brokers. Office developers said they plan to offer comparable rents for their buildings in the works.
Along with 20-40 Pacifica, the Irvine Co. is building a tower at its recently acquired Irvine Center Towers complex near John Wayne Airport.
Monthly rents at the 10-story building going up on Von Karman Avenue are being quoted at $3.40 to $3.70 per square foot.
Rates at the four existing Irvine Center Towers buildings are closer to $3 per square foot.
Most of the rents being quoted for new towers are in excess of $3.50 per square foot,a baseline local real estate industry watchers believe developers need to charge to offset high construction and land costs.
“It’s becoming clear that the era of $2.50 to $2.75 rents in Orange County is ending,” said Douglas Holte, director of OC and San Diego operations for Houston-based developer Hines Interests LP.
Rates of $3 to $4 per square foot for newer-space puts OC more in line with the office markets of Los Angeles and San Diego, Holte said.
Hines is building a 12-story building in Irvine, 2211 Michelson Drive, next to the airport. Rates for the building haven’t been disclosed. They’re likely to fall somewhere between the two Irvine Co. projects, according to Holte.
No tenants have been named for much of the nearly 160 floors of high-rise office space announced or under construction for the Irvine and Santa Ana areas.
Only Los Angeles-based Maguire Properties Inc. has announced preleases for 270,000 square feet of its 530,000-square-foot Park Place office project.
Last week, the Irvine Co. announced plans for two more towers.
“Where are the tenants coming from?” said Kurt Strasmann, managing director for the OC operations of Grubb & Ellis. “The market is very healthy, but at a certain point, there are only so many tenants.”
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Research Park Towers
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University Research Park: towers would be tallest in complex |
The Irvine Company last week announced plans for two more Irvine office towers, this time in University Research Park.
The company has filed plans with the city to build two 12-story towers on Academy Drive at the research park, next to the University of Califor-nia, Irvine.
The buildings would total about 511,000 square feet.
The towers would be the tallest in the 185-acre research park, which is dominated by low-rise office space.
No time frame has been set for construction, according to spokeswoman Jennifer Hieger.
Real estate sources tell the Business Journal that construction for the project could be on a fast track. Steel for the buildings already has been ordered, they say.
No tenants are likely to be signed for the project prior to construction. With the research park nearly full and expansion under way at UCI, demand for office space at the buildings should be strong, Hieger said.
University Research Park is expected to hold about 2.7 million square feet of office space when it’s built out. It is home to about 44 businesses and more than 4,000 workers.
Larger tenants include Time Warner Inc.’s America Online, Cisco-Linksys LLC and Skyworks Solutions Inc.
The Irvine Co. now has 76 floors of high-rise office space either planned or under development locally.
,Mark Mueller
