The Irvine Company has added two hometown office towers to its property management portfolio in the past year and has an even larger project moving ahead in the Irvine Spectrum, consolidating its role as Orange County’s dominant real estate owner.
But it’s the Newport Beach-based developer’s out-of-town additions that are grabbing headlines lately.
The latest blockbuster revelation: The privately held company this month confirmed it was the primary owner of the MetLife building in New York City, one of the best-known towers on the Manhattan skyline.
The 58-story tower also is one of New York’s largest buildings, running 3 million square feet. That’s roughly nine times the size of the Irvine Co.’s recently opened 520 Newport Center Drive office, which sits next to its Fashion Island shopping center.
The MetLife building—plus recent additions of skyscrapers in Chicago and a heavy acquisition and development push in Silicon Valley—mark a notable change in the makeup of the Irvine Co.’s portfolio.
The company now has a non-OC portfolio of office, industrial and retail properties that is approaching what it owns in Orange County in terms of square feet.
Irvine Co. is estimated to manage about 34.5 million square feet of commercial space in Orange County, according to data from this week’s list of OC’s top commercial property managers (see list, page 31).
The company now owns nearly another 30 million square feet of commercial space outside of OC, according to Business Journal estimates.
Those figures do not count Irvine Co.’s extensive apartment holdings in or out of OC; the company is believed to be the second-largest owner of apartments in California, trailing only Chicago-based Equity Residential.
The developer, which manages its own local buildings and most of its nonlocal properties, remained No. 2 on the property managers list. It trails only the local office of CBRE Group Inc., which manages a 50-million-square-foot portfolio of OC buildings for a variety of commercial property owners.
The two companies, on a combined basis, manage about 42% of the 204 million square feet of local properties represented on the list, which includes 31 companies.
The property management market is generally a zero-sum game, meaning if one company grabs a new office, industrial or retail client, it means another company lost that business.
There typically isn’t too much year-to-year variance in our annual listing of top area property managers, except in cases such as a development push, a major portfolio sale, or a decision by a large landlord to outsource its property management duties or bring them in-house.
This year’s crop of entries on the list showed a 1.7% increase in the amount of space under management—a hike of about 3 million square feet year-over-year.
A good portion of the overall gain came from Irvine Co.’s two office towers that opened in Newport Center, accounting for 660,000 square feet of new space.
Irvine Co. also has maintained an aggressive stance as a builder and buyer outside OC as part of a push that preceded the recent recession and continued through the down years to the present.
More Over the Years
The company’s non-OC portfolio of managed commercial properties was estimated to run less than 10 million square feet a decade ago, according to Business Journal data at the time.
Five years ago, its nonlocal portfolio of office and industrial buildings was estimated to have jumped to about 18 million square feet, buoyed by a major investment in 2007 in San Diego’s office market, where it owns more than 7 million square feet, and deals in the Silicon Valley.
The latest round of confirmed additions to the company’s portfolio—including the 3-million-square-foot New York property; nearly 4.5 million square feet of office space in Chicago; and a flurry of new deals in Silicon Valley—were prime reasons in bringing the nonlocal total close to the 30-million-square-foot range.
Irvine Co. owns about 500 commercial buildings, in and out of OC. The company said its portfolio of investment properties totals nearly 100 million square feet, factoring in apartment, hotel and other properties, in addition to the buildings accounted for in the list.
The developer’s recent accumulation of out-of-town trophy properties could potentially give those nonlocal office buildings a higher combined value than those it owns in OC.
MetLife Building
The MetLife building, for example, has been conservatively valued at $3 billion. Irvine Co. confirmed this month that it owned a 97.3% stake in the building. The skyscraper, located at 200 Park Ave., could well be New York’s most valuable office.
The building brings a different sense of scale in terms of its size and worth. The most expensive office building in OC, based on recent sales, is the 3161 Michelson tower in Irvine, which sold to Toronto-based Manulife Financial Corp. in 2012 for nearly $270 million.
Irvine Co. Executive Vice President Dan Young told Bloomberg this month that the company first acquired a stake in the MetLife building in 2005 and has steadily been increasing its ownership position.
Irvine Co.’s role in the building came to light this month as banks reported working to arrange a $1.4 billion refinancing deal for a mortgage originally taken out on the property by the building’s former majority owner, Tishman Speyer.
The disclosure of the company’s investment in the MetLife building was followed by more good news for Irvine Co. and its chairman, Donald Bren, the wealthiest real estate executive in the U.S.
Insurer MetLife said last week that it signed a 550,000-square-foot lease at the building, nearly quadrupling the amount of space it had been occupying there. It’s reported to be one of the largest new office leases in the city in years.
