Less than a year after buying 50 acres and announcing plans for a $100 million-plus mixed-use commercial park in South Orange County, Turner Development is close to signing its first set of deals.
If all the development contracts go through as expected, almost half of A.J. West Ranch’s 866,000 square feet would be claimed.
The flurry of signings would also signal the start of more than 400,000 square feet of new office, hotel and R & D; space in Lake Forest.
“We’ve moved fairly quickly to keep up with the market,” said Rusty Turner, president of Turner Development. “Since buying the property in January, we were able to entitle it, move over 1 million cubic yards of dirt and build an infrastructure.”
Besides lining up a developer to build a 118-room extended-stay hotel, which Turner won’t name now, David Pittman’s Acacia Properties in Newport Beach has been signed to a tentative development deal for three office buildings totaling more than 72,000 square feet.
“With the way lease rates and property values have been going up, there are a number of users who are looking at owning their own buildings,” said Pittman. “That’s what we’re targeting,companies interested in owning real estate rather than renting.”
Pittman plans to put his buildings on the market for around $185 a square foot,a price he described as “pushing the envelope a little” compared with current asking rates. “These buildings might be a little pricier than what smaller users who want to take advantage of SBA (Small Business Administration) loan programs are geared toward,” he said. “But they’re still in a range that will make it attractive for medium-size companies that want to lower their real estate costs or supplement it by leasing out space to other users.”
Each building will have its own separate pad and aim to attract a high-end user, according to Pittman.
Voit Commercial’s Trent Walker and John Griffin, who are handling the marketing of A.J. West Ranch along with colleague Louis Tomaselli, will be brokering Pittman’s new buildings.
More Deals Coming
Acacia is submitting plans for its $10 million project to the city of Lake Forest. Pittman would like to deliver product to market by September.
Also signed to a preliminary deal to develop office space targeted at the small to medium-size corporate buyer is a partnership between Coastal Investment Properties’ owner Don Schisler and George Hedley, principal of Hedley Construction and Management in Newport Beach.
The pair is planning to build six office buildings at A.J. West Ranch. The offices will be two stories each and range in size from 8,700 square feet to 12,000 square feet. The $11.4 million project will total 61,700 square feet.
Pending approval by the city, construction would start in May and be completed by June 2001. A team from CB Richard Ellis in Newport Beach made up of Scott Johnstone, Jon Marchiorlatti, Chris Bates and Greg Puccinelli has been selected to market the new buildings for Schisler and Hedley.
“We’re very excited that two different development groups are committed to A.J. West Ranch,” said Turner, who added that he is also now planning to move forward with his own business park.
Low-Rise in the Mix
Turner Development has decided to keep 12 acres to build a $25 million, 10-building low-rise project at A.J. West Ranch.
“These will be one-story buildings with 25% to 30% of mezzanine space,” said Turner. “A lot of the flex-tech space is two stories catering to larger tenants. But these are going to be R & D; buildings targeting smaller users.”
Turner Development will submit final site proposals to the city of Lake Forest for approval, with plans to begin construction of the business park’s initial phase in six to eight months.
Remaining available at A.J. West Ranch, according to Turner, are a 20-acre parcel, a 5-acre site and a 2-acre parcel.
There are firm offers for the smaller two, he said.
“The other available site has seen heavy activity. We have several developers who have expressed serious interest in that parcel,” said Turner.
But like Pittman’s project, most of the new offices being planned by Turner Development are aiming for the high end of a market some believe is peaking.
Voit Commercial’s Walker isn’t concerned.
“A few months ago, lease rates were reaching a plateau and people were worried about the market softening,” he said. “But activity has picked up in the fourth quarter. There are more requirements floating around right now than new buildings being drawn up.”
In Lake Forest, Walker estimated that more than 600,000 square feet of new office buildings are being developed.
“But almost all of that is for lease,” he said. “At A.J. West Ranch, we’re servicing a different type of user,the smaller corporate real estate buyer.” n
