Orange County’s youngest city is just about tapped out for commercial space.
In the past few issues of the Business Journal, we’ve written about a number of big construction projects moving forward in Aliso Viejo: a $70 million Renaissance ClubSport hotel and gym, an eight-story tower for Newport Beach’s Pacific Life Insurance Co., two four-story office buildings and possibly an addition for QLogic Corp.
In total, those projects add up to about 800,000 square feet.
Those projects are being done at Parker Properties LLC’s Summit Office Campus. Along with about 700,000 square feet of offices being built at Shea Properties’ nearby Vantis office and residential project, that makes up most of Aliso Viejo’s remaining prime office space to develop.
Aliso Viejo now has close to 3 million square feet of class A office space, said John Desper, vice president for the Newport Beach-based office of CB Richard Ellis Group Inc.
When the Vantis and Summit projects are completed, Aliso Viejo will have closer to 5 million square feet of office space.
The Irvine Spectrum has close to 9 million square feet of office space.
Good luck finding room for more commercial construction in Aliso Viejo, developers say.
Once the Summit and Vantis projects are finished, it will be a struggle to find land where more office buildings can be built, said Lee Redmond III, chief executive of Parker Properties.
“That’s it for Aliso Viejo, there’s no land left,” Redmond said.
Any future office projects will likely come from the redevelopment of existing industrial space in the area, he said.
The scarcity of available land is affecting the retail sector, too. In March, Irvine’s Faris Lee Investments brokered the sale of a section of the nearby Shops at Aliso Viejo for a record $830 per square foot.
“The real estate is irreplaceable,” said Faris Lee president Richard Walter said at the time of the deal. “You can’t build anything new in Aliso Viejo.”
RESIDENTIAL
Irvine’s Western National Realty Advisors recently bought a 20-acre parcel of land in Riverside County’s Wildomar.
Plans call for a 320-unit apartment complex at the site. Construction is set to begin in June and the project should be open by May 2008.
The development and acquisition arm of Western National Group focuses on Southern California apartment properties.
Financing for its latest development comes from a $50 million private equity fund it raised last year. The company has used those funds to buy and develop another 645 apartment homes in four projects, including ones in Anaheim and Garden Grove.
Western National is said to be lining up a much larger second round of financing, in the $200-million range, according to industry trade publication Real Estate Alert. It took Western National about seven months to raise the $50 million fund.
It looks like the company’s second fund, which could buy up to $800 million of property, including debt, should be enough to handle Western National’s growth plans.
Western National is looking to double its holdings of 13,000 apartments, according to Stephen Duffy, the company’s chief operating officer.
Apartment Upgrades
Another Irvine-based investment company, Real Estate Partners Inc. is making waves in the apartment sector.
The investment and management company recently said it would spend about $35 million to renovate 2,500 of the apartments it owns in Texas, Louisiana and Arizona.
The upgrades should be finished by the end of 2007.
The renovations impact a large chunk of Real Estate Partner’s apartment portfolio. It owns about 5,500 apartments, along with 500,000 square feet of commercial space.
Real Estate Partners counts about $475 million in real estate holdings.
And More Development
Newport Beach’s Canddle Development Inc. is scouting locations outside OC for apartment projects.
The company, which also goes under the name Vintage Housing, is closing on a land deal in Spokane, Wash., to develop a 287-unit senior home.
The five-story, 250,000-square-foot complex is aimed at poor people ages 62 and older. Rents would be $420 to $640 a month, for rooms 550 square feet to 650 square feet in size.
The cost for the project is expected to be $30 million.
The developer is trying to get Washington’s housing finance commission to finance part of the project with $17 million worth of revenue bonds. The bond sale could be completed by June, according to a report in the Spokane Journal of Business.
Construction is set to begin in July and be completed in fall 2007.
Canddle Development, which also has a regional office in Reno, has developed similar projects elsewhere in Washington, and focuses on projects in the Western U.S.
