Fluor Corp.’s pending move to Texas couldn’t come at a better time,at least when it comes to selling the company’s Aliso Viejo headquarters.
Last week, Fluor detailed plans to move its headquarters to the Dallas area to be closer to customers in the central and eastern part of the country.
In the process, Fluor plans to sell its 100,000-square-foot building near the San Joaquin Hills (73) Toll Road. Fluor has two other Aliso Viejo buildings it plans to keep to house some 800 engineers and other workers who are staying behind.
With the sale, Fluor is set to cash in on a ripe market for prime office space.
“All the chips are in their favor,” said Kurt Strasmann, who heads Grubb & Ellis Co. in Orange County.
Investors have bid up the value of OC’s trophy buildings to levels last seen in the 1980s, brokers said. The catalysts: low interest rates and a building comeback in demand for office space.
Fluor’s four-story glass-and-steel headquarters building at One Enterprise Drive could fetch about $25 million, or $230 to $250 per square foot, according to Grubb’s Strasmann.
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Park Place: still casually called ‘Fluor building’ |
That would top what Fluor got for two nearby buildings it sold to Quest Software Inc. last year. Quest, which is relocating from Irvine to Aliso Viejo, got a good deal, according to Strasmann.
Quest paid Fluor $18.6 million for an 89,000-square-foot building, or $210 per square foot, and $14 million for a 78,000-square-foot building, or $179 per square foot.
Fluor sold the buildings to Quest because it had more space than it needed after a falloff in oil, gas and power work.
Last year, five buildings at the nearby Summit Office Campus in Aliso Viejo sold for about $100 million, or roughly $200 per square foot.
Other class A buildings near John Wayne Airport have sold for $300 per square foot or more, reaching prices paid by Japanese buyers in the 1980s, according to brokers.
The highest price paid so far: Knobbe, Martens, Olson & Bear LLP’s buy last year of its headquarters at MacArthur Boulevard and Main Street for $325 per square foot.
Of course, whoever buys Fluor’s building will have to fill it up. Even there, signs are encouraging.
Office vacancy in South County is about 11%, down from 14% a year earlier, according to CB Richard Ellis Group Inc.
Absorption has been positive for the past few quarters, meaning more space is being taken via leases and sales than is being vacated.
There’s some competition on the horizon: South County has about 144,000 square feet of office space under construction. It’s set to be finished in coming weeks.
Even so, South County’s “office market is expected to be even tighter well into 2005,” according to CB Richard Ellis.
Fluor dropped a bomb last week with its plans to shift its headquarters from OC. With $9.4 billion in 2004 sales, Fluor ranks behind Santa Ana’s Ingram Micro Inc. and Cypress-based PacifiCare Health Systems Inc. as the county’s third-largest public company.
In 1912, Fluor got its start as a small general contractor in Santa Ana. The company moved to Los Angeles for a while and returned to OC in 1976.
Upon returning, Fluor built a distinctive, postmodern campus at Michelson Drive and Jamboree Road. The complex is known as Park Place, though many still offhandedly refer to it as the “Fluor building.”
In 1999, Fluor moved to its current, smaller low-rise space in Aliso Viejo.
