The commercial development arm of Walnut’s J.F. Shea Co. is gearing up for a busy next few years, even amid near-term uncertainty for Orange County’s developers.
The past week saw Shea Properties move into a new corporate headquarters in Aliso Viejo, while announcing a beefed-up office leasing team for its largest commercial project, Tustin’s 820-acre Legacy Park.
Shea Properties just tapped the Irvine office of Cushman & Wakefield Inc. to handle office leasing for Legacy Park, part of the 1,580-acre redevelopment of the former Marine helicopter base.
At a planned 6 million square feet, it’s one of the larger brokerage assignments in the county in recent years.
Along with offices, hotels and shops, Legacy Park is set to include 2,105 homes. A partnership of Shea Properties and sister company Shea Homes of Walnut is handling the project, in collaboration with the city of Tustin. Another original partner in the project, Dallas-based homebuilder Centex Corp., pulled out in April.
Shea and the city closed escrow on 300 acres of Legacy Park in June.
Cushman’s first task for Legacy Park: leasing up the premiere batch of the commercial development planned for the site, totaling 340,000 square feet. That office space, including two- and three-story buildings along Red Hill and Warner avenues, breaks ground next year, and should be done by mid-2009.
Later in 2009, another 525,000 square feet of office space is expected to be ready.
The brokerage will be seeking corporate headquarter tenants, “lifestyle conscious” companies, environmentally friendly users and emerging growth corporations for the first batch of leases, and possible sales.
“There’s going to be opportunities for build-to-suits (to be completed) in a little more than a year and a half,” said Eric Hinkelman, senior managing director for Cushman & Wake-field’s Orange County office. “It’s not too early to start planning.”
Slow leasing of late for office space hasn’t dampened either companies’ long-term ex-pectations for Legacy Park. Officials are banking on the market stabilizing by the time the bulk of Shea’s upcoming construction comes on line, starting in 2009.
“The waters are a little choppy. But this (project) has the opportunity to be unique, not just for Orange County, but for all Southern California,” Hinkelman said.
The market “has taken some hits. But we started at a very strong position,” said Steve Center, senior vice president of office leasing for Shea Properties. “Developers here were building (when vacancy rates) were at 7%. In areas like Denver and Phoenix, developers were building into 11% markets.”
Orange County’s office vacancy rate now stands a little more than 9%. Most market watchers expect vacancy rates to rise to at least the low teens once the mortgage industry shakeup plays out, and after new office towers are finished by year’s end.
“We’ll weather this fine,” Center said. “There are tenants out there that are growing.”
One tenant that is growing is Shea Properties itself. The company just moved into bigger offices in its Aliso Viejo hometown, at its mixed-use Vantis campus. Shea is moving into 45,000 square feet of space at 130 Vantis, a three-story 78,368-square-foot building that recently was completed.
Shea is moving from its 34,000-square-foot offices just down the street, at 26840 Aliso Viejo Parkway.
That space won’t be vacant for long as SiliconSystems Inc., a maker of data storage devices that moved from Hawthorne to Aliso Viejo in 2004, is nearly doubling in size and moving next door into Shea’s old space.
Shea, which now counts about 115 employees, plans to grow by some 25% in the next few years as work at Legacy Park and other projects continue, the company said.
The company’s portfolio is expected to double to $4 billion in the next five to six years, according to Chief Executive Colm Macken.
At completion, Vantis will contain about 700,000 square feet of commercial space built by Shea Properties, along with some 400 homes built by Shea Homes.
Shea Properties’ new space is the second building at the project to be completed. The next office scheduled for the site, with a 2009 completion date, is expected to be a build-to-suit project, company officials said.
