Hines Interests LP just finished the first office tower seen in Irvine in nearly a decade. Now comes the busy part.
The Houston-based developer is priming itself for a much larger presence in Orange County. Major projects are on tap in Irvine and Anaheim.
Hines and partner Archstone-Smith Trust of Englewood, Colo., last month were selected by the city of Anaheim to develop 53 acres of land next to Angel Stadium of Anaheim.
Offices, one or two hotels and about 1,000 apartments are tentatively planned for the site, which was the last unclaimed parcel of developable land in the city’s Platinum Triangle.
In Irvine, Hines is in the early stages of getting city approval for nearly 700,000 square feet of campus-style, environmentally friendly mid-rise office space along Jamboree Road.
When Hines entered the local market in late 2005, it set an internal goal to own or develop $1 billion worth of buildings in the county within three years,an “admittedly ambitious” figure, said Douglas Holte, director of OC and San Diego operations for the company.
The developer could soon exceed that figure with the deals on tap. Company executives aren’t fazed.
“We’re not afraid of big numbers,” said Jeffrey Hines, president and co-owner.
The company, known best for high-rises in the U.S. and overseas, currently owns real estate totaling $14 billion.
Hines and partner Crescent Real Estate Equities Co. of Fort Worth, Texas, unveiled their 2211 Michelson tower late last month. The 12-story building, which took 16 months to build, is about a third leased.
Recent leases signed at the building include investment firm Macquarie Bank Ltd. and brokerage Orion Property Partners.
2211 Michelson “was a good entry point (in OC) for us,a great initial project,” said Hines, who was in town for the building’s opening.
“What drew us here to Orange County was the diversified economy,” he said. “The jobs that are here are good ones and (the businesses) here are growing.”
The 266,000-square-foot building is one of a few in California to get the eco-friendly stamp of approval from the U.S. Green Building Council’s Leadership in Energy and Environmental Design, known as LEED.
Hines said in late 2001 his firm started making it a priority to focus on green features for its U.S. projects.
“In Europe, they’ve been ahead of the curve,” Hines said. “We learned a lot about the (green) technologies there.”
Features at 2211 Michelson include the use of recycled building materials, the use of off-site solar power and recycled water for landscaping. Tenants’ utility bills are expected to be 10% lower at the building, compared to traditional offices.
Institutional investors such as the California Public Employees Retirement System and prospective tenants,not to mention the city of Irvine,have warmed up to the benefits of LEED certification, the gold standard for environmental design, Holte said. It can cost a developer about an extra 2% in construction costs.
Brokers have been slower to embrace the concept, he said.
The company plans to get LEED certification for its next big project in Irvine, along Jamboree Road from Michelson Drive to Teller Road.
Early plans call for about five mid-rise office buildings to replace the three existing warehouses and plants,including a building currently used by St. John Knits International Inc.,that had long been part of the area.
A 7.5-acre industrial site that once housed a medical device unit of Tyco International Ltd. already has been razed. Next to come down is a warehouse previously used by Linksys Inc., a maker of home networking routers and other gear, next to the former Tyco building.
St. John has a lease at its building, which Hines bought last year, through 2011.
The current owner of the former Tyco property, Washington, D.C.-based General Investment Funds, had considered condos and retail at the site, but now is working with Hines to get the site zoned for offices.
The first phase of the project calls for 250,000 square feet of office space, which is still a few years away from construction, according to city records. An additional 430,000 square feet also is planned in the second phase.
Anaheim plans at the Platinum Triangle also are still in the early stage and could be affected by the proposed sale of Hines’ partner in the venture.
Archstone-Smith, whose primary holdings are apartments, said late last month it’s being bought by a partnership sponsored by New York investors Tishman Speyer Properties and Lehman Brothers. The deal is valued at $22.2 billion.
Unless another bidder emerges, “I would doubt you’ll see any changes in strategy” at Anaheim because of the Archstone-Smith sale, Hines said.
Archstone-Smith and Hines are set to pay $150 million to $200 million for the city-owned land.
Along with hotels, shops, and about 2 million square feet of office space, the two developers’ initial plans call for homes.
Under terms of the 1996 stadium lease signed by the Angels, the team has to give permission before any homes can be built on the land.
The new owners haven’t met with Angels owner Arte Moreno yet, Holte said. Nor have they spoken to the National Football League about a stadium that has long been proposed for the site.
