The Nexus Cos. has signed five major leases totaling nearly 320,000 square feet, filling roughly 80% of its Nexus Twin Towers project near the San Diego (405) and Costa Mesa (55) freeways. The heavy pre-leasing at the two nine-story buildings, which total 400,000 square feet, is another sign that Orange County’s office market remains strong, despite continuing concerns about the dot-com shakeout and signs of slowing in the national economy. “Given the fact that we’re five and a half months from our completion date, I think that the pre-leasing activity bodes well for the marketplace,” said Jeffrey John Bitetti, director of marketing for Nexus, which is based in the South Coast Metro section of Santa Ana. The Nexus Twin Towers project, at 1 and 2 MacArthur Place, is the largest active office development in OC. With completion set for spring, tenants so far include:
—MSC.Software Corp., which agreed to a 12-year lease for 156,000 square feet. The company plans move its headquarters from Los Angeles and its Costa Mesa operation to the Nexus Twin Towers.
—American International Group, which signed a 10-year lease for 70,000 square feet where the New York-based insurance company will relocate local claims and insurance offices from Costa Mesa.
—Deloitte & Touche, which inked a 10-year lease for 58,000 square feet for its consulting unit, which is moving from a nearby Santa Ana building.
—Practice Builders, a consulting division of Jamesburg, N.J.-based Medical World Communications Inc., which agreed to a five-year lease for 16,000 square feet and is relocating from Parker Hannifin Corp.’s campus in Irvine.
—World Premier Investments, which signed a five-year lease for 10,000 square feet. The shopping center developer is relocating from its current Santa Ana headquarters. A small caf & #233; for tenants, coupled with the planned relocation of the Nexus corporate offices, rounds out the current roster of tenants. Negotiations are ongoing and Bitetti said he expects the project to be 95% leased by year’s end. The Twin Towers is benefiting from renewed interest in the corridor along the Costa Mesa Freeway. Earlier this month, Laguna Hills-based Birtcher Real Estate Group and the Pradium Funds of New York completed their $41 million purchase of the nearby Brookhollow Office Park. Late last year, First American Financial Corp. relocated from downtown Santa Ana to its newly built headquarters alongside the freeway. Although Bitetti declined to discuss the specific value of the leases for the new Twin Towers tenants, he did say that the average rents are about $2.40, which is below that of other buildings in the John Wayne Airport area. The Nexus Twin Towers can turn a profit at that rate, Bitetti said. “It depends on how you buy the property and what are your costs,” he said. “We are the general contractor and we handled the entire process of development. We can be more attentive to how the dollars are being spent.” Nexus purchased the land in April 1998 from Chase Manhattan Bank, which had seized the property from Brookfield Development. The 5.9-acre parcel the project sits on was acquired for a “competitive rate,” Bitetti said, though he declined to offer numbers. Nexus expects to make money off the leases because the company also handles much of the marketing as well as tenant improvement work through Nexus Construction Services Co., he said. “We’re kind of old-school in that we will roll up our sleeves and take control of our product from start to finish,” Bitetti said. One the biggest, and riskiest, advantages for Nexus may be that owner and President Curt Olson personally provided the financing to launch the project. Bank of America is providing construction financing. “We’re very unique in as much as we don’t have an institutional partner, which gives us flexibility to do deals in that we don’t have a lot of layers to go through to make a decision,” Bitetti said. The closely-held nature of the project also provides Nexus with a range of options, Bitetti said. “We may hold on and put a long-term loan on the project,” he said. “Or we may take on an institutional or pension fund partner.” With the Twin Towers nearly full, an outright sale also is possible, given the interest drawn by other new OC office developments. Newport Beach-based Koll Development Co. recently sold its new nine-story tower at The Irvine Concourse office park, while Phoenix-based Opus West Corp. is marketing its 12-story Opus Center Irvine building. The Twin Towers mark a comeback for Nexus. The firm, which built nearly 1 million square feet of office space in Santa Ana and Orange in the 1980s, hasn’t been active in development for more than a decade. When Nexus announced the Twin Towers project two years ago, skeptics doubted whether the market would embrace the high-rise project in an era of technology campuses. Now Bitetti said Nexus is keeping its eyes out for another deal. “We have quieted the naysayers by the success of the Twin Towers,” he said. “And we’re looking to do much more development in the near future.” n
