The city of Tustin is nearing a deal with the Southern California offices of Lincoln Property Co. to have the company take over development of a 37-acre creative-office project at Tustin Legacy.
Lincoln Property, a Dallas-based real estate investor and developer with local offices in Santa Ana, is moving toward the final stages of being selected as the master developer of the Cornerstone at Tustin Legacy project.
The company, which has been an active investor in Orange County office properties in the past few years, edged out a handful of local developers for the right to take over the massive project, according to real estate sources.
Cornerstone would be Orange County’s first major ground-up creative-office campus; it’s also one of the largest new office projects of any type now on the books in the area.
Initial Phase, Buildout
The proposed campus, to be built on land near the southwestern edge of the 820-acre Tustin Legacy development, could total nearly 860,000 square feet at buildout.
An initial phase of office development could run up to 400,000 square feet and would be geared toward speculative development, according to John Buchanan, deputy director of economic development for the city of Tustin.
That’s a switch from previous plans, which emphasized build-to-suit development at Cornerstone.
An improving office market and lack of similar creative-office buildings in the market prompted the switch to speculative development, Buchanan said.
“Now is the time,” Buchanan said. “There’s a demand for unique product like this.”
Buildings at the campus are expected to “address the 21st-century work environment” and feature an overall design character that “will be contemporary, modern and sustainable,” according to city plans previously filed for Cornerstone.
The offices would go up near the intersection of Barranca Parkway and an extension of Armstrong Avenue that’s expected to open soon. It would also be adjacent to a new park that will run through a portion of Tustin Legacy.
The project would provide a major boost to Tustin’s office market, which runs at about 2 million square feet, according to brokerage data.
It would be the largest nonresidential project built on the city’s former Marine helicopter base since The District, a 1-million-square-foot shopping center, opened in 2007.
Tustin Legacy Additions
Recent additions to the Tustin Legacy have been residential-focused. A pair of new apartment projects are in the process of opening at Tustin Legacy this year, as is Greenwood, a 375-unit new-home project overseen by Irvine-based Standard Pacific Corp.
A 22-acre retail project proposed by Jacksonville, Fla.-based Regency Centers near Tustin Ranch Road and Edinger Avenue also is on the books for the former base.
A discussion on a proposed deal for the Cornerstone land between Lincoln Property and Tustin took place last week in a city council hearing that was closed to the public, according to city filings.
Buchanan declined to name the selected developer for the Cornerstone project—listed in city filings as “LPC.”
Lincoln Property executives declined to comment.
Buchanan said that last week’s talks were the first step in a process that will lead to an exclusive negotiation agreement between the two parties, which is expected to occur in a little more than a month. That process will in turn lead to a sale of the land to the selected developer.
Terms of a prospective deal between Lincoln Properties and Tustin, and a timeline for the sale and conveyance of land, haven’t been disclosed.
Smaller parcels of developable land near Tustin Legacy that are slated for office and industrial projects have been selling in excess of $3 million per acre, according to brokerage data.
Broadcom Corp. paid a little less than $1.8 million an acre for the land that will hold its new office campus at the area’s other big former military base, which is at the Great Park Neighborhoods in Irvine.
The master developer of Cornerstone could in turn sell off individual portions of the land to prospective owner-users or other developers. “It is expected, however, that the main developer will be required to show it has the financial ability to build out at least half the project before the entire 37 acres of land at the project are conveyed, Buchanan said.
The selected master developer will also need to show it has a willingness to do speculative development at the Tustin project, he said.
