Hines Interests LP is the latest big office owner in Orange County looking to add apartment development to its local repertoire.
The local office of the Houston-based real estate owner and developer, one of OC’s largest office owners, is working to get approvals for a plan to add apartments, retail and a hotel on land it owns near the intersection of South State College Boulevard and Birch Street in Brea just off the Orange (57) Freeway.
The development would go up on excess land at Brea Place, a six-building office campus totaling about 560,000 square feet.
Brea Place is across the street from the 1.1 million-square-foot Brea Mall, Orange County’s third largest shopping center by sales. The retail center, owned by Simon Property Group Inc. of Indianapolis, reported nearly $500 million in sales for the 12 months ended in June.
Hines and financial partners bought Brea Place in a series of transactions starting in 2014. The campus totals nearly 30 acres.
The proposed development, which would include 747 apartments in a pair of midrise buildings, a 150-room, Marriott-branded, business-
class hotel,and about 17,000 square feet of retail space, would be built on about seven acres now used as surface parking for existing offices.
Brea’s planning commission held a hearing on the proposal last week. If the city approves it, construction could begin early next year and open in mid-2019, according to Bhavesh Parikh, development director for Hines, whose local operations are based in Newport Beach.
The developer is optimistic that the project, which has been in the works since last year, will get necessary approvals. “The city’s vision was for this to be a mixed-use campus,” Parikh said.
Architects Orange is heading the design of the development, whose apartments would be wrapped around a multilevel parking structure. An existing parking structure would get an additional two levels to handle the increased density, according to Parikh.
The project would be Hines’ first multifamily development in Orange County, although it’s also working on an apartment project in Pasadena in Los Angeles County, Parikh said.
Hines is considering another mixed-use project at a site it owns in North OC, the Pacific Center Anaheim campus, which is just north of the Riverside (91) Freeway and next to Kaiser Permanente Regional Medical Center.
Hines bought the property late last year for an estimated $40 million. In addition to 143,560 square feet of office and industrial space, the 15.5-acre Pacific Center site holds land entitled for more than 900 apartments.
Hines partnered with L.A.-based private equity firm Oaktree Capital Management LP in early 2014 to buy the six midrise offices at the Brea Place campus for a reported $80 million.
It paid the Brea-Olinda Unified School District a reported $25 million later that year for about 17.4 acres of net leased land that a portion of the campus was on in order to give it more flexibility for development.
The new owners have renovated interior and exterior spaces.
The offices at the campus were about 60% leased at the time of the 2014 acquisition; they’re now about 85% occupied, according to Parikh.
Magnetic Malls
A number of OC’s largest office owners have increasingly been pushing for apartment development on excess land they own at their properties, especially those next to the area’s largest shopping centers.
Apartment complexes have either recently opened or are under development at locations within walking distance of seven of Orange County’s 10 largest shopping centers by sales, according to Business Journal data.
The latest rental complex piggybacking on retail is Irvine Company’s Villas Fashion Island, a 524-unit project next to the upscale Newport Beach retail center. The first apartments at that high-end rental project opened in January.
Villas Fashion Island was built on a site that previously held a low-rise Irvine Co. office complex that was razed to make way for it.
Other sites where similar projects are in the works include Orange, where Irvine-based Greenlaw Partners last year unveiled plans for three midrise apartment complexes on excess office property it owns surrounding the Outlets at Orange, the nearly 900,000-square-foot mall just off the Garden Grove (22) Freeway that’s the county’s ninth largest shopping center by sales.
The 821 apartments would be built under the Orange Collection banner, according to city filings. Some of the land now used as surface parking for Greenlaw’s office buildings would be converted to multilevel parking structures to handle the additional density, according to city documents.
Greenlaw has also proposed a six-story, 165-room hotel on land next to the Outlets at Orange next to its 19-story City Plaza office tower.
Early this year, the owners of an office building next to MainPlace Mall in Santa Ana proposed building a 247-unit apartment complex on excess land there.
An affiliate of Irvine-based real estate investment and management firm PRES Cos. bought the 12-story, 111,268-square-foot office—also known as the Wells Fargo Building—in 2015 for a reported $20.5 million.
The roughly 4.5-acre property also includes excess land within a few yards of the southern edge of the 1.1 million-square-foot MainPlace Mall, OC’s eighth largest mall by sales.
The development is one of several rental projects proposed in recent years for sites within walking distance of MainPlace Mall, which is near the intersection of the Santa Ana (I-5) and Garden Grove (55) freeways.
