The Orange County skyline is undergoing a dramatic transformation.
In the John Wayne Airport and South County submarkets, there is an almost daily increase in the size of the steel frames at the construction sites of several office buildings.
Add to that a handful of high-rise condominium projects, which have created a more urban, cosmopolitan atmosphere in OC.
Office buildings under construction:
Maguire Properties Inc.’s Park Place at 3161 Michelson Drive in Irvine. Completion is expected in August.
The Irvine Company’s 20-40 Pacifica in the Irvine Spectrum and 18100 Von Karman Ave. at Irvine Center Towers. Completion is expected in the third quarter.
2211 Michelson Drive by Hines Interests LP and Crescent Real Estate Equities Co. The 265,000-square-foot building could be the first in the current wave to finish in May, though no tenants have been signed yet.
The third building at Opus Center Irvine by Opus West Corp. The 13-story building is at 2050 Main St. in Irvine and is set to be 313,000 square feet.
A total of 4.8 million square feet is under construction. Of that, 2.8 million square feet is available. That’s more than 100 floors of space, which is good news for tenants.
Several more buildings are proposed:
In Anaheim, a three-story, 62,500-square-foot office building is planned by Silver Oak Development LLC. Construction is expected to start in January and complete by June. This will be the first new office building in Anaheim in three years.
Mike Harrah of Caribou Industries Inc. is hoping to break ground on the long anticipated One Broadway Plaza in December. The 600,000-plus-square-foot, 37-story Santa Ana tower would be the county’s tallest.
For projects larger than 40,000 square feet, a total of 3 million square feet of office development is in the proposal phase.
Rents, Availability
During the third quarter, the availability rate rose three-tenths of a percent from 11.6% to 11.9%. The class A rate increased by one point, going from 12.6% to 13.6%. Overall rents rose 13 cents per square foot to $2.34. Class A rates rose nine cents to $2.55.
Contiguous Blocks
Available blocks of contiguous space (100,000 square feet or more) fell from 21 to 18 during the third quarter. Next quarter should see this number increase dramatically as the projects under construction reach our reporting threshold of being nine months or less away from delivery.
Leasing
Arbonne International LLC, a cosmetics company, is taking 90,000 square feet at Jamboree Center. The space is being sublet from Ameriquest Mortgage Co., which left earlier this year after a downturn in the mortgage industry.
Capital Group Cos. took two buildings of 99,000 square feet of space in the recently completed Discovery Business Center in the Irvine Spectrum.
Another large block was partially taken by VitalStream Inc., which leased about 22,000 square feet of sublease space at 555 Anton.
Possible Tenants
Several large companies are rumored to be shopping for space, including Newport Beach chipmaker Mindspeed Technologies Inc. and a fast-food company.
Airport Area
The John Wayne Airport area class A availability rate was unchanged in the third quarter at 15.4%. Class A rents in the airport area were $2.78, up 14 cents from the second quarter.
Sales
Sixteen buildings totaling 735,000 square feet changed hands for $171 million in the third quarter. The average price per square foot was $232, according to Real Capital Analytics Inc.
Houston-based Hines Interests LP recently bought two buildings on Teller Avenue and plans to redevelop the industrial site as office space. The buildings now are leased to Cisco-Linksys LLC and St. John Knits International Inc.
An East Hills Office Park building in Anaheim Hills sold for $16.5 million or $288 per square foot. K-II Fullerton LLC bought the building from Irvine’s LBA Realty.
Economy
Home sales have been declining for the past several quarters. Now for the first time in 10 years, home prices have dropped too.
But despite the slumping housing market, the OC economy remains healthy with annual local job growth registering sixth in the nation.
Analysis by Studley Inc.
