It’s been a record-setting year for Irvine Company’s office properties group, even with the leasing market in Orange County largely on the skids.
The Newport Beach-based landlord’s local operations—which oversee about 16 million square feet of office space in OC—just posted its busiest year to date, in terms of square feet leased.
For the year ended June, Irvine Co.’s office properties division inked nearly 7 million square feet of deals, according to Val Wheeler, new chairman of the division.
Another 1 million square feet of leasing was completed in July. That has the landlord optimistic that the rest of 2009 will remain busy, even if OC’s job growth hasn’t shown signs of improvement of late, said Mike Santley, Irvine Co. senior leasing director.
Tenants—who on average take 7,000 square feet in Irvine Co. buildings—are still looking for space, just for different reasons, said the landlord’s leasing team.
“There have been some Band-Aids and one year deals. But a number of (big tenants), such as law firms, think they’re buying at the bottom and have done longer deals,” Santley said.
Looking for these kinds of opportunities has helped the division grab business, according to Wheeler, who last week was promoted to the newly created role after serving as president of Irvine Co.’s office properties division since 2007.
A year ago, “we made a conscious decision we were going to keep the deals moving and that we were not going to lose any tenants,” Wheeler said.
That approach has resulted in a few coups for the division, such as grabbing the Federal Deposit Insurance Corp. for a 200,000-square-foot deal at Irvine Co.’s new 40 Pacifica tower last November.
Key Renewals
The approach also helped the landlord close a number of key renewals. Last month Irvine Co. announced it resigned Verizon Wireless, a unit of New York-based Verizon Communications Inc., for 475,000 square feet at its Spectrum-area campus on Sand Canyon Avenue. Some 2,300 employees work at the 30-acre campus.
“We took an aggressive approach, and the result was the best year for us,” Wheeler said. “There are deals to be made out there, and we’re getting more than our fair share.”
In deals like the FDIC’s lease and KPMG LLP’s 43,277-square-foot lease at 20 Pacifica, Irvine Co.’s been able to offer monthly rate terms for high-end properties that most other landlords can’t compete with, both in terms of lower lease rates and concession packages, according to tenant brokers.
The company, along with the Office of South Coast Plaza buildings in Costa Mesa, also is benefiting from the instability being faced by debt-saddled landlords such as Los Angeles-based Maguire Properties Inc., according to brokers.
Stability is a message Irvine Co.’s been pushing of late.
A core group from Irvine Co.’s leasing team—senior leasing directors Santley, Mike Hodges and Craig Brashier, as well as vice presidents of leasing John Turner and Rick Wandrocke—has been with the landlord for more than 15 years.
That group of brokers has worked on 9,000 leases, totaling 62 million square during that time, they estimate.
Now isn’t the first down market the division’s faced.
In the recession of the early 1990s, OC’s economy was largely influenced by the aerospace industry. When that market shut down, the local office market—which had just added nearly 7 million square feet of new space—took years to recover.
The difference then “was that you could drop rates and there still was no activity. Today there is much more diversity” in OC’s tenant base, said Wandrocke.
The landlord’s adding about one tenant a week in the Irvine Spectrum area. It has about 3,500 tenants there.
