Grading has started on the first high-rise office tower set for Irvine in several years.
Houston-based Hines Interests LP held a ceremonial groundbreaking in late January for its project at 2211 Michelson Drive near John Wayne Airport.
But underground and ground level work began in earnest after the company secured a grading permit in the wake of the ceremony, said Doug Holte, director of Hines’ Orange County and San Diego operations.
Privately held Hines, one of the country’s largest office developers, is awaiting foundation and structural permits for the tower. Those permits are expected to be finalized by the end of February.
About 2,300 tons of steel have been ordered for the project. The steel is expected to be delivered in early summer.
The steel is set to be erected by late summer, with the building completed by spring 2007, Holte said.
Flagship Investment
The office building is Hines’ first development in OC. The upscale tower is designed by the Los Angeles office of architecture firm DMJM Design.
The high-rise is Hines’ flagship investment in OC, said Jeffrey Hines, president and co-owner of the developer. The company hopes to invest close to $1 billion in local office properties during the next three years.
“We don’t just helicopter in, build an office, and then leave,” Jeffrey Hines said at the groundbreaking.
Hines also is looking to buy office buildings for redevelopment or renovation, Holte said in an earlier interview.
In Los Angeles and San Francisco, the company grew to $1 billion and $2 billion in a matter of a few years.
“Ultimately, though, our growth projections are determined by what the market requires. If it takes five years, that’s OK,” Holte said.
The 12-story, 265,000-square-foot building is being built in a partnership with Fort Worth, Texas-based Crescent Real Estate Equities Co.
The total cost of 2211 Michelson is expected to be more than $90 million.
HSH Nordbank AG is providing up to $85 million in loans for the project, though Holte expects Hines to borrow less than $80 million.
It is the first big OC financial deal of its type for Germany-based HSH Nordbank. Newport Beach-based Buchanan Street Partners arranged the loan.
Competition Down the Street
Two issues still need to be worked out: tenants and rents.
No tenants have been announced for the speculative tower. Holte said that interest has picked up now that construction is visibly moving ahead.
Tenants looking for space in 2007 have just started looking in January, he said.
“We’re pleased at the prospect of being the first new tower in the John Wayne Airport submarket, and we’re happy that the marketplace is responding positively to the project,” Holte said.
Proposed rents for the project haven’t been disclosed.
Other developers expect that with high costs for steel and other construction materials, rents could approach the $3.50 per square foot that The Irvine Company reportedly is asking for its planned twin towers at the Irvine Spectrum.
Competition on Michelson, among other new office developments, also could play a big part in what rents are levied at Hines’ project.
The same week of the Hines groundbreaking, the Irvine Co. put up signs a block away announcing that they bought the 900,000-square-foot Irvine Center Towers.
The previous owners of Irvine Center Towers, Cigna Corp. and Transwestern Commercial Services, had proposed building a less-glitzy, 230,000-square-foot office tower at the complex.
Local market watchers say that Irvine Co. chairman and owner Donald Bren will want those plans reworked into something more upscale.
A redesign of a tower at Irvine Center Towers likely would push any new construction back several months.
Also in the neighborhood: Los Angeles-based Maguire Properties Inc. has plans for a 20-story tower at Park Place in Irvine, while Opus West Corp. has plans for a 13-story, 300,000-square-foot office building called Opus Center Irvine III.
