New Century Financial Corp.’s signing of a hefty lease last month at Park Place in Irvine overshadowed another big deal at the same site: Los Angeles-based law firm Gibson, Dunn & Crutcher LLP took 80,000 square feet.
Both leases are for a proposed 20-story office tower by Maguire Properties Inc., a real estate investment trust based in Los Angeles. Maguire has nearly half its tower at 3161 Michelson Drive booked.
The deal with subprime lender New Century for 190,000 square feet has been known for months. Gibson’s lease was a coup for Maguire.
Maguire is luring the law firm away from 4 Park Plaza, one of the white office towers at The Irvine Company’s Jamboree Center office and hotel complex in Irvine.
“Jamboree Center also is first-rate,” said Gibson partner Jeff Thomas. “But the move will give us the chance to design new and state-of-the-art offices and have access to more amenities.”
Gibson is set to move its 200 employees, including 75 lawyers, to Park Place in May 2007, according to Thomas. That gives the Irvine Co. about two years to fill the gap.
“There are very few large blocks of space available in the county,” said Irvine Co. spokesman Bill Rams. “We expect to see healthy demand for the space when the firm moves.”
Maguire plans a 600,000-square-foot tower near the San Diego (I-405) Freeway at the northern edge of Park Place, a sprawling 105-acre office and retail campus. Its retail tenants include Wahoo’s Fish Taco, Mother’s Market & Kitchen and Houston’s Restaurant.
Brokers have said it’s become more difficult to find three or more floors empty in a building,about 60,000 square feet or more.
The county’s office vacancy rate dipped below the key psychological level of 10% in the first quarter, according to CB Richard Ellis Group Inc. The rate was 9.6% in the first few months of this year, down from 10.6% at the end of last year.
Maguire had a home-court advantage with Gibson: They both have headquarters in the same Los Angeles building, 333 South Grand Ave., which Maguire owns.
The New Century deal helped Maguire land Gibson, according to Bill Flaherty, senior vice president of leasing and marketing with the real estate investment trust. The first lease showed Maguire was committed to building its high-rise, he said.
Developers often sign an anchor tenant or two before starting construction. The practice mitigates risk and helps secure a bank loan needed to begin work on a project.
Flaherty said his company should start construction in fall and finish by spring 2007.
Meanwhile, Houston-based Transwestern Commercial Services has fixed a date to break ground on a speculative high-rise in Orange County.
The company said it would start construction next month on a 230,000-square-foot, 10-story tower in Irvine whether or not it has a tenant signed.
Transwestern, which has offices in Irvine, is developing the high-rise at 18100 Von Karman Ave. for the site’s land owners: affiliate Transwestern Investment Co. of Chicago and Cigna Realty Investors, a unit of Philadelphia-based Cigna Corp.
Other developers are said to be eyeing speculative projects, including the Irvine Co. It plans twin 14-story towers in the Irvine Spectrum, according to the city and industry sources.
As for Maguire, it has increased its exposure to mortgage companies, which some analysts say could be due for a correction.
New Century announced earlier this year it had signed a lease with Maguire for another 179,000 square feet of space at Park Place in other buildings. The company already has moved about 800 of its workers there, with another 1,000 scheduled to move during the next few months.
Subprime lenders make loans to people with imperfect credit. Other lenders have some space at Park Place.
There is little risk of New Century ever defaulting on its lease, according to Maguire’s Flaherty. He said the lender is expanding into more traditional lending with its acquisition of Royal Bank of Canada’s U.S.-based RBC Mortgage Co.
“They have a very solid game plan that they are executing well,” Flaherty said.
