Egypt’s great pyramids have been around for more than 4,000 years. The closest thing Orange County has to a pyramid might not last much longer than 40.
Government officials are re-evaluating the long-term plans for the Chet Holifield Federal Building, the massive, pyramid-shaped office on Avila Road in Laguna Niguel, just off Alicia Parkway.
A big-dollar sale or redevelopment of the federally owned property,commonly known as the “Ziggurat” because of its terraced design that resembles ancient temples,are likely options, government officials said.
Commercial real estate sources said the government might be able to fetch $100 million or more for the office and the 78 acres of land around it. Since the land’s likely worth more than the office itself, the aging office could be torn down to make way for a big development, sources say.
Any construction is probably five or more years away, particularly considering the state of the local market.
Early-stage plans from developers envision smaller offices, shops, hotels and perhaps some housing built at the site.
An outright demolition of the outdated building,considered an eyesore by some locals,isn’t out of the question.
“From a pure efficiency (and) economic standpoint, most people would say demolish (the building), rather than throw $100 million at it,” said David Haase, realty officer for the U.S. General Services Administration’s Real Property Utilization and Disposal division, which is based in San Francisco.
GSA officials said they’re committed to a plan that contributes to the vitality of Laguna Niguel, while also maximizing financial return to the government and taxpayers.
City officials said they’re willing to explore redevelopment.
“We would welcome the opportunity to rethink the space,” said Tim Casey, Laguna Niguel’s city manager.
Distinctive
At a little more than 1 million square feet, the Chet Holifield building is one of the largest offices in South County and easily one of its most distinctive.
The futuristic building,described by some, incorrectly, as the West Coast Pentagon,has been used as a prop in several movies, including “Outbreak” and “Death Race 2000.”
Like much of OC’s office market these days, the seven-tiered building is underutilized. Vacancy levels there are about 25%.
Last month, the government’s National Archives and Records Administration said it would be relocating some of the records it stored at the Holifield building to another site in Riverside by early 2010.
The two largest Holifield building tenants remaining are government agencies,the Internal Revenue Service and the Western Regional Department of Homeland Security.
A sale of the building to the private sector and relocation of the existing government tenants to more modern offices elsewhere in OC appear to be likely, according to developers familiar with the property.
Not too many of the building’s current workers live in the immediate area, making its suburban location, west of the San Joaquin Hills Corridor (73) toll road, inefficient for the government, developers believe.
Existing offices in Irvine or even as far as Anaheim might be better suited for those departments, real estate executives said.
The GSA is currently looking to lease out much of the remaining vacant space at the building to non-government tenants for at least a few years, until longer-term plans are finalized.
Outdated
In addition to the nearly 250,000 square feet of empty space, the William Pereira-designed property also is outdated.
The government’s identified more than $90 million of upgrades needed to modernize the building and nearby ground.
Close to $70 million of those improvements need to be made within five years, according to the government’s estimates.
Millions of dollars in security, seismic, electrical service and distribution, ceiling and other work is needed for the building, which hasn’t been renovated significantly since its construction in 1971, the GSA said.
The property also contains a large amount of parking space and other empty land that is underutilized.
If the GSA opts to sell the property, it will be sold as-is, it said.
Redevelopment
Government officials say they’re open to any and all redevelopment proposals for the building and are still in the early stages of information gathering for the property.
In April, the GSA asked developers and other interested parties to submit conceptual redevelopment proposals for the property. Submissions were due late last month.
GSA officials said last week that five development companies,primarily local companies,responded to the early-stage inquiries.
Interested developers were said to include Aliso Viejo-based Shea Properties Inc. and Irvine-based Birtcher Development and Investment Co.
Another 20 to 30 interested parties, including architects, engineers and construction companies, also expressed interest, according to Haase.
After reviewing the developers’ responses, the GSA’s next step will be to begin soliciting offers for the property. The goal is to start that process within the next year, according to Haase.
Developers say the city might be best served converting part of the land into housing or apartments, while building a smaller amount of upgraded office space alongside new retail development.
The current down market could play a part in the time frame for when a potential sale process might begin, Haase said. It still might take five years or more before a plan is chosen and redevelopment begins, he said.
Ultimately, the project will have to provide “as little risk as possible to the government,” he said.
Because the building isn’t listed on the National Register of Historical Places, there’s fewer obstacles standing in the way of demolishing the building, if that’s the direction a new owner decides to go with.
History
There’s still plenty of history tied to the property.
The building was designed for aerospace company Rockwell International Corp., which never took the space after a big defense contract failed to materialize. (Rockwell International no longer exists but left behind Iowa’s Rockwell Collins Inc. and Milwau-kee-based Rockwell Automation Inc.)
The company offered to trade the building to the federal government in exchange for some surplus government facilities of equal value, according to the GSA, which assumed control of the building in 1974.
At the time it was built, the building was relatively isolated from the rest of the county, making its appearance even more striking, but commercial and housing expansion in the area soon followed.
It’s said to be the third-largest building that GSA owns. The property,renamed in 1978 to honor the longtime 19th district congressman,is still financially viable, despite its vacancy problems, the GSA said.
It’s not the first time the government has explored selling the property.
In the early 1980s, the government urged a sale of the building, which at the time was about half-full. It was described at the time as “the worst example of under-utilized federal property.”
The building was appraised at $77 million at the time, but when the highest bid it received was only $22 million, the building was taken off the market, according to reports.
