COMMERCIAL
Some of Orange County’s big office landlords are starting to make the difficult choice of lowering rents to nab leases.
It’s not universal as of yet, said Royce Sharf, executive vice president for the Irvine office of Studley Inc., which represents tenants looking for space.
“Some landlords are still in shock” over the rapid fall in the county’s office market, which now counts a vacancy rate of about 16%, he said.
The vacancy rate and construction of office buildings have given potential tenants plenty of options.
Studley recently gave a tour of prospective sites to a local business looking for more than 200,000 square feet of campus-type space. The tour had 14 stops, Sharf said.
Irvine’s Bixby Land Co. is among the landlords acting aggressively in lease talks.
Bixby has been advertising lease rate cuts in the 10% to 13% range along with sizable broker incentives for five office buildings near Jamboree Road and MacArthur Boulevard in Irvine.
The company’s also been putting money into existing buildings, hoping the improvements will entice existing tenants to stay where they are, said Bill Halford, Bixby’s chief executive.
“The only thing worse than getting a rent you don’t like is getting no rent,” Halford said. “Most landlords are late to the party (when the market turns). We’re trying to be nimble.”
Halford and Sharf spoke in late May at an event hosted by the Center for Real Estate at the University of California, Irvine’s Paul Merage School of Business.
The event was the latest in the center’s mentorship program, which brings in local real estate executives to speak to graduate students about trends in the market.
BioRealty’s Big Deal
Irvine medical space developer BioRealty Inc. went back to school in Massachusetts to strike its biggest land deal.
The company signed a deal with JM Holdings Inc., part of Tufts University in Boston, to head up development for a 100-acre medical science park about 35 miles west of the school’s main campus.
The campus, to be known as Grafton Science Park, is set to hold up to 702,000 square feet of research, manufacturing and office facilities. It’s next to a school for veterinary medicine that Tufts already runs.
With medical development costs running about $300 per square foot, the project could end up costing about $210 million to build,excluding land costs, said Stan Wendzel, BioRealty managing director.
The offices will be put up on a build-to-suit basis. BioRealty already is in talks with a number of potential companies that could take space, Wendzel said.
For West Coast drug and medical device makers, the campus is attractive because it offers an East Coast location at prices lower than those found in downtown Boston and Cambridge, he said.
The chance of a similar project being built in OC is unlikely, according to Wendzel.
“I don’t see the land availability locally,” he said.
Closer to home, BioRealty is about a month away from moving its headquarters from Irvine to San Clemente.
Platinum Triangle Renewal
Anaheim home furnishing company W-C Designs Inc. has renewed a lease for its Platinum Triangle headquarters.
The company signed a five-year renewal for a 152,280-square-foot industrial space at 905 to 907 E. Katella Ave. The lease is valued at more than $5 million.
A proposal to build a 192,000-square-foot office, 130-room hotel and seven-story parking structure at the Katella site has been filed with Anaheim’s Planning Commission. The landlord has the option of ending W-C’s lease if the plan moves forward, said Stephen Schloemer of the Irvine office of Colliers International.
Schloemer represented landlord K/L Anaheim Properties I LLC and K/L Anaheim II LLC in the lease. W-C represented itself.
RESIDENTIAL
Irvine’s Foremost Communities Inc., a housing development and investment company, has hired Michael Canfield as its senior vice president of land acquisitions.
He’ll be in charge of identifying land for development in Southern California and will be the point person coordinating acquisition strategy with Foremost’s main investment partner, an affiliate of Starwood Capital Group Global LLC.
The two companies are planning to buy $250 million in land for housing development in the next few years.
Canfield previously worked at Irvine-based SunCal Cos., where he led acquisitions and oversaw transactions including more than 100,000 home lots.
