The Irvine Company appears to be seeing an uptick in leasing activity for its new 520 Newport Center office tower, even as a recent report suggests that the newest addition to the seaside corporate hub now has one of the highest-ever asking rents for a building in Orange County.
The 21-story office, located next to the developer and investor’s headquarters, was completed late last year and became the first big speculative office to open in OC since the recent recession.
The building has landed a handful of prominent tenants since then, including Bill Gross’ Janus Capital Group Inc.; Stifel, Nicolaus & Co.; Acacia Research Corp.; and R.D. Olson Development.
The 331,000-square-foot office was nearly 40% leased as of earlier this month.
A good chunk of its available space could soon be spoken for, according to Steve Case, executive vice president of Irvine Co.’s office division.
Signatures were out for a handful of undisclosed tenants, which, combined with other just-signed deals, could bring occupancy closer to 60% by the end of September, Case said last month.
A few new leases have subsequently been completed, according to sources.
New notable deals completed include a full-floor lease for Hong Kong-based Wing Lung Bank, a subsidiary of China Merchants Bank.
Wing Lung’s only two U.S. locations so far are in San Francisco and the Los Angeles County city of Alhambra.
The Newport Beach office on the 16th floor of the building is expected to become the bank’s U.S. headquarters.
Wing Lung’s San Francisco office opened last year. Company officials said at the time that they were looking to develop new business in California and throughout the U.S.
It had 41 bank locations in Hong Kong as of last year and roughly $24 billion in deposits, according to its most recent annual report.
Also new to 520 Newport Center’s tenant roster, according to sources: Wells Fargo Advisors, a brokerage subsidiary of San Francisco-based Wells Fargo & Co.
The Wells Fargo office will be leasing nearly 22,000 square feet on two floors on the top half of the building and will be relocating from another nearby office in Newport Center.
New Ceiling?
Terms of the Wells Fargo and Wing Lung leases for 520 Newport Center haven’t been disclosed, but recent financial reports out of Asia indicate it likely didn’t come cheap.
The building now has monthly asking rents that start at $5 per square foot, according to a recent regulatory filing by Toronto-based Manulife Financial Corp., which contended that Irvine Co. is currently asking $8 per square foot for the building’s premium space.
The top end of that range would appear to mark a new high for high-rise office space in OC.
Higher-end buildings in Newport Beach and around John Wayne Airport typically have rents closer to $3 per square foot. Some other Irvine Co. buildings in Newport Center have rents near $5.
An $8-per-square-foot rate hasn’t been reported before.
Irvine Co. was rumored to be seeking prices closer to $7 for the best space at 520 Newport Center as of earlier this year.
Executives with the developer declined to comment on the rents at 520 Newport.
Local brokers tell the Business Journal they haven’t heard of any deals in the $8-per-square-foot range for the building.
SGX
The mention of the $8-per-square-foot benchmark came in paperwork for a prospective real-estate-focused initial public offering that Manulife had been looking to launch on the Singapore Exchange, or SGX.
The Michelson office tower in Irvine—a trophy office property that Manulife bought in 2012 for about $277 million—is one of three buildings that the insurance company owns in the U.S. and was packaging in the IPO.
The IPO, which has yet to launch, would raise about $440 million.
The IPO, which would also include ownership in a Los Angeles tower and another building in Washington, D.C., was initially expected to become effective in mid-July.
That kickoff date has since been postponed for an undetermined amount of time, and news reports out of Singapore have cited general market turmoil for the delay.
The offering, if it moves ahead, will be the first-ever real estate investment trust listed on the Singapore Exchange that focuses on U.S. properties.
