Developers Busier in ’03, but on Small Buildings for Sale
By MATHEW PADILLA
Commercial developers built a lot of buildings last year,they were just too small to add up to much.
Orange County’s top 28 developers recorded 5.4 million square feet of commercial space developed here in 2003, a 15% drop from the 6.4 million square feet developed by the companies a year earlier.
That’s according to this week’s Business Journal list of local developers ranked by square feet developed in OC in 2003.
The decline may seem odd, considering that developers started on 46 projects last year, a 12% jump from 2002.
But many of those projects included small industrial and office buildings for sale, a hot item last year.
Last fall, a study by Grubb & Ellis Co. found 270 small industrial buildings had been started, planned or completed here.
But many of those buildings were less than 10,000 square feet.
Developers shifted to smaller buildings to meet demand from owners of small companies who wanted to buy a building to house their businesses in instead of renting. The catalyst: low interest rates. Private investors also scooped up smaller buildings last year.
Robert Guthrie, president of No. 4 Guthrie Development Co., said while developers built less square footage last year, revenue generally was up. Sales prices of smaller buildings have shot up in several parts of the county, he said.
Costa Mesa-based Guthrie Development put up about 486,000 square feet of space last year, double the prior year’s total. The company’s president said he almost exclusively focused on small buildings for sale in 2003.
One reason the developer’s total went up so much was that his partner John O’Brien returned from Iraq in July, Guthrie said. As a reserve Marine, O’Brien was called to serve in combat as a lieutenant colonel, he said.
“John served his country and he came back with a vengeance to do more deals,” Guthrie said.
But with interest rates on the rise, Guthrie said he is diversifying. Small buildings for sale now account for about half of his projects, he said. The developer also is focusing on leasing buildings in the range of 20,000 to 50,000 square feet.
The Newport Beach office of Woodland Hills-based Voit Development Co. was No. 1 on the list, up one slot from last year. Voit’s square footage developed rose 15% to 885,300 from a year earlier.
One of the biggest projects Voit worked on last year and is finishing up now is Voit Brea Business Park on Imperial Highway. The project counts 18 buildings ranging from 10,000 to 50,000 square feet.
Voit is getting started now on 19 buildings for sale at Tustin Gateway, which formerly was Steelcase Inc.’s campus in Tustin. The project includes redevelopment of half the 1 million-square-foot campus.
No. 2 Irvine-based Centra Realty Corp. is new to the list. The company, formed in 2001, has been doing some sizable built-to-suit projects, which helped raise its square footage developed by 177% to 720,000.
One of the company’s sizable projects is Roger Cleveland Golf Co.’s 130,00-square-foot headquarters going up in Huntington Beach.
Principal Keith Ross said Centra is finishing up construction this year on some of its projects.
More Housing, Less Office
One of the biggest players in OC, No. 13 Newport Beach-based The Irvine Company, dropped eight slots on the list with a 75% decline in square footage developed to 143,000.
“The market dictates what we build and unfortunately there wasn’t demand for new office space last year,” said Bill Rams, a spokesman with the company.
The Irvine Co. was busy developing homes at Quail Hill and other areas last year. The developer also put up a three-story office building in Newport Center that finished in April.
On the retail side, Rams said last year his company developed the Quail Hill Village Center. In 2002, the company’s total was higher with three retail developments: Trabuco Grove Shopping Center in Irvine, The Bluffs in Newport Beach and an expansion of Irvine Spectrum Center.
The company plans further expansions at the Spectrum, including the addition of Nordstrom and Target stores.
“What we build on the retail side varies from year to year,” Rams said. “We typically build new retail alongside a new village.”
Ten companies on the list did not develop anything last year. The Business Journal decided to keep them on the list, since it’s normal to have big swings from year to year. Plus, we didn’t want to leave off some historically big players.
Some of the developers, such as No. 21 Phoenix-based Opus West Corp., which has offices in Irvine, and No. 23 Irvine-based Sares-Regis Group, have focused on apartments and condominiums amid the hot housing market.
Opus was No. 1 on last year’s list.
This list doesn’t include Irvine-based Boeing Realty Corp., the real estate arm of Chicago-based Boeing Co. Boeing Realty is something of a special case. It’s responsible for some big OC developments, but the company’s strategy is to entitle excess Boeing land and then sell it to developers.
