The California Department of Transportation is moving its local operations from Irvine to Santa Ana after signing one of the largest new office leases reported in Orange County so far this year.
The state transportation agency, which operates under the name Caltrans, recently signed a nearly 130,000-square-foot lease for the State Fund building, an eight-story office at 1750 E. Fourth St. in Santa Ana.
The office, near the intersection of the Santa Ana (I-5) and Costa Mesa (55) freeways, is part of the Xerox Centre campus, which includes a namesake 15-story tower that’s one of the best-known office buildings in the city.
A venture between Houston-based Hines Interests LP and Oaktree Capital Management LP in Los Angeles bought the State Fund building two years ago for a reported $40 million.
The 230,000-square-foot office was a little under half occupied following the sale.
The Caltrans deal fills the office. The remainder of the building is occupied by the State Compensation Insurance Fund, the largest provider of workers’ compensation insurance in California.
The insurer sold the office to the Hines-Oaktree venture and leased back a portion of the building under a long-term deal.
Caltrans is scheduled to move into the new location around September, according to Hines officials.
Executives with the Irvine office of Hines declined to provide specifics of the lease but said that it was “a long-term commitment,” and that the landlord was working on the build-out of the space for Caltrans.
“We find (Caltrans) to be a perfect complement to the State Comp, who has a similar long term commitment (at the building),” Hines officials said in an email.
The area around the Xerox Centre complex is seeing its share of development recently. Newport Beach-based apartment developer and owner Lyon Living is building Nineteen01, a five-story rental complex with 242-units at 1901 E. 1st St.
Another five-story rental complex called the Madison is planned for a few acres of vacant land between the State Fund building and the Xerox Centre tower.
Park Place Departure
Caltrans is moving from the Park Place office campus near John Wayne Airport, where it had been for nearly 20 years. The transportation agency had been leasing close to 180,000 square feet there, according to CoStar Group Inc. data.
It had been one of the first large office tenants to move into the low-rise, atrium-style building portion of the sprawling office complex following the departure in the late 1990s of construction giant Fluor Corp., which used the futuristic campus for its headquarters prior to its move to Aliso Viejo, and later Texas.
Other large tenants at Park Place’s atrium buildings include Ingram Micro Inc., which moved its headquarters from Santa Ana to Irvine last year, and Western Digital Corp., which moved from Lake Forest several years ago.
The new Caltrans lease in Santa Ana is one of three new office leases topping the 100,000-square-foot mark reported in OC this year, according to CoStar data.
The largest of those three leases was the 190,000-square-foot leaseback of the Orange campus that holds the local operations of New York-based staffing services company Volt Information Sciences Inc.
Volt sold the four-building campus about a month ago to a venture between Hines and Oaktree, for $35.9 million. The tenant plans to remain on the campus through 2031, according to regulatory documents.
