Michael Harrah’s long-awaited One Broadway office tower in Santa Ana has always been expected to eventually become the commercial real estate developer and owner’s crowning local achievement.
But recent filings indicate the distinction could shift to his pending development of another site in the city: the headquarters of the Orange County Register and 14.3 acres surrounding the building on Grand Avenue.
Harrah believes it has the potential to top his outlook for the proposed 37-story One Broadway tower, he said last week. His plan is for a heavy dose of apartment or condominium construction and partnering with other residential developers on building out the Register site, which sits next to the Santa Ana (I-5) Freeway.
In a best-case scenario, construction of the One Broadway tower could go hand in hand with the redevelopment of the Register site and a proposed $300 million transportation system that would run through those parts of the city.
That in turn would provide a boost to the continued revitalization of downtown Santa Ana—not to mention Harrah’s already healthy bottom line.
$250M
Harrah heads locally based Caribou Holdings Inc. and is tied for the No. 43 ranking on the Business Journal’s annual OC’s Wealthiest list (see separate section with profiles, related stories, page 1). We’ve estimated Harrah’s wealth at $250 million, based on new details of his extensive real estate holdings in Santa Ana and outside the county, in addition to other assets.
That figure has the potential to rise significantly if the unconventional developer—known around town as Big Mike—can get his two most ambitious local projects off the ground and running.
One Broadway will cost nearly $340 million to build, but the project has the potential to be worth $500 million or more, assuming the tower gets the high-wattage tenants he’s targeting, he said last week.
Leasing efforts for One Broadway are focused on a large technology company, he said, though he declined to name the prospect and continues to work a field of law firms, government agencies and other potential tenants.
A time frame for the skyscraper breaking ground hasn’t been finalized.
The developer has long had a requirement that 50% of the building be preleased before breaking ground, although Harrah said that his lenders have recently dropped the threshold to 25%.
The Register site could be the largest investment in an existing property in the city for Harrah, whose Santa Ana properties have totaled more than 70 buildings and 5 million square feet over the years.
How much of a yield Harrah ultimately sees will depend on the direction the project takes.
A variety of mixed-use options, including apartments, a shopping center, high-rise residential towers, and other uses are being considered.
He’s already put close to $60 million into the site. Harrah paid a reported $27 million for the five-story 625 N. Grand Ave. office building that houses the Register’s operations two years ago.
Earlier this year, he bought 14.3 acres on Grand Avenue that surround the Register, in a bankruptcy-driven deal that landed him a few other key assets of the daily newspaper, including its printing presses. Harrah put the total cost of that deal, struck in April, at about $34 million.
The cost of total development would likely run $240 million to $300 million, depending on the details of the project, he said.
That still leaves plenty of room for profit, according to Harrah, who only recently began to divulge details of his vision for the site—although final plans are still very much a work in progress and likely a year away from final approvals.
Harrah said he submitted two proposals to the city for the site last week.
One plan incorporates 846 low- and midrise apartments and some retail, while the other envisions a pair of towers alongside the freeway and the conversion of the existing printing press facility into a shopping mall, among other features.
The hot multifamily sector means that apartments currently appear to be the more viable direction, particularly if a large tenant for One Broadway wanted employee housing located nearby.
Centerpiece
The centerpiece of both proposals lies in the conversion of the roughly 300,000-square-foot facility that houses printing presses into a creative-reuse retail or residential building, according to Harrah.
He said he’s proposed building a smaller and more efficient printing press facility elsewhere in the city for Denver-based Digital First Media, which now owns the Register and uses the presses on the site to print a number of its 11 daily newspapers in Southern California.
Both the Register site and One Broadway are close to planned stops of the OC Streetcar, a 4.15-mile light rail project that would connect Santa Ana to Garden Grove.
Construction on that project could begin in 2018, according to the Orange County Transportation Authority.
