The Irvine Company is said to be ready to return to high-rise office building, with twin 14-story towers planned for the Irvine Spectrum, according to city and real estate sources.
The Irvine Co. is planning 630,000 square feet of space at two towers across from the company’s Irvine Spectrum Center mall. Construction could start late this year or early next, even before a tenant is secured, according to sources familiar with the project.
The Irvine Co. declined to comment for this story.
The last time the Newport Beach-based real estate company put up high-rises was in 1989. That year it built the 15-story building at 8105 Irvine Center Drive, the former Irvine Spectrum home of Lake Forest’s Western Digital Corp., and the Spectrum’s other tower at 8001 Irvine Center Drive.
Plans for the towers should go before Irvine’s Planning Commission in July or August, according to Tim Gehrich, principal planner with the city.
As planned, the towers would mark the most bold endorsement yet of the office market’s comeback.
Late last year, the Irvine Co. detailed plans to build 270,000 square feet of low-rise office space in the Irvine Technology Center near the Tustin border.
The Irvine Co. is seen as a pacesetter for other developers, who could come forth with towers of their own, brokers said.
“Whoever has the guts and wherewithal to build should do it,” said Royce Sharf, executive vice president in the Irvine office of New York-based brokerage Studley Inc.
By the time an office building is built in about 18 months, demand is likely to be stronger, according to Sharf.
Orange County’s overall office vacancy in recent months has dropped below the key psychological threshold of 10%, according to local brokerages. The Spectrum’s vacancy is lower at 7.7% for pure office space, according to Voit Commercial Brokerage LP.
The county’s major landlords, including the Irvine Co. and Los Angeles-based Maguire Properties Inc., are set to raise rents by as much as 15% this year at some buildings, according to Grubb & Ellis Co.’s first-quarter office market report.
There are some skeptics. Other brokers have said rents need to climb much higher to justify building more office space.
But the case for the Irvine Co., the county’s largest landowner, is different, said Thomas Murphy, vice president in the Irvine office of Chicago’s Jones Lang LaSalle. The company has cash to build and doesn’t have to pay top dollar for land to build on, he said.
The company still is taking some risk, including the prospect of building on speculation it can land a major tenant during or after construction.
And the Spectrum isn’t a high-rise hub like the area around John Wayne Airport. After building two Spectrum towers in 1989, the Irvine Co. spent much of the 1990s putting up low-rise buildings popular with technology companies.
The twin towers are proposed for the southwest corner of Pacifica and Irvine Center Drive, across from the former Western Digital building.
For now, there isn’t much office building going on in the county.
Olen Properties Corp. of Newport Beach is putting up a 130,000-square-foot, five-story building in Brea for subprime lender Residential Mortgage Assistance Enterprise LLC, which plans to relocate from elsewhere in Brea.
In Irvine, Scholle Corp. signed a 200,000-square-foot lease with Newport Beach-based Impac Mortgage Holdings Inc. and plans to put up a seven-story building for the mortgage company.
Maguire Properties is in talks with Irvine-based subprime lender New Century Financial Corp. to lease several floors of a proposed 20-story building in Irvine.
