Real Estate Watch: Low-Rise Office Space
Completions Outpace Starts Across All Sectors
A surge of completions in the office/flex market cut the remaining construction activity in half during the fourth quarter, officially pushing the office sector into the mature phase of the real estate cycle. More than 2 million square feet of office space was added to the market at the end of 2001, concentrated in the airport area and South Orange County. Low-rise, campus-style construction accounted for a large portion of the completions during the quarter, including: 323,950 square feet at University Research Park, 150,370 square feet at the Irvine Technology Center, and 246,054 square feet at Discovery Business Center, all in Irvine. Mid-rise construction completions in the quarter included Phase IV of the Summit in Aliso Viejo, the Experian campus project in Costa Mesa, and the new Ford headquarters site in the Irvine Spectrum. One eight-story building, Koll Center Irvine North, completed construction, adding approximately 172,000 square feet to the high-rise office market. Three new low-rise projects in the airport area, totaling approximately 221,000 square feet, started construction during the quarter.
Industrial construction also tapered 27% in the fourth quarter, with the completion of nearly 765,000 square feet, and the ground breaking of about 258,00 square feet. The majority (68%) of the completed construction was in North Orange County, including four manufacturing buildings at the Fullerton Business Park. Two large facilities were completed in North Orange County during the fourth quarter: one 193,000 square-foot warehouse in Anaheim, and one 114,000-square-foot manufacturing building at the Broadway Business Park, also in Anaheim. Another 181,087 square feet were completed in the airport area in the quarter, all concentrated in Santa Ana. Approximately 159,381 square feet of manufacturing space at the Burke Santa Ana Business Center and two R & D; buildings at the Dyer Business Center in Santa Ana completed development by year-end.
Although no new retail construction broke ground during the fourth quarter, construction continued on 3.7 million square feet of retail space. South Orange County, where residential development has remained active throughout 2001, has more than 1.5 million square feet of retail space in development, including two community centers in San Clemente, one specialty center in Lake Forest, and one power center in Rancho Santa Margarita, expected to be completed in early 2002, near the new community of Ladera Ranch. North Orange County has 1.4 million square feet of retail construction, including two new centers (one power and one community center) in La Habra and two new centers in Anaheim. Construction on the 180,000-square-foot third phase of the Irvine Spectrum entertainment center continues, and completion is scheduled for spring of 2002.
Analysis provided by CB Richard Ellis’ Global Research and Consulting.
