56 F
Laguna Hills
Monday, May 27, 2024

Irvine Office Tower Site Pivots to Hotel

A new hotel proposed near the corner of Von Karman Avenue and Main Steet in Irvine is the latest shake-up to the airport area’s hospitality scene.

In a switch-up of plans for the nearly 1-acre site at 17850 Von Karman Ave., a 172-room hotel is making its way through the city’s planning process.

The land, now holding a roughly 30,000-square-foot parking lot, had long been envisioned as the future site of a nine-story, 237,000-square-foot office project, led by a venture between the local office of Houston-based developer Hines and Los Angeles-based Oaktree Capital Management, which acquired the site in 2013 for a reported $5 million.

Records from real estate tracker CoStar Group Inc. indicate the property is in line to change hands again.

Florida-based RK Hospitality Development is heading new plans to build a five-story hotel at the site, which documents indicate will be branded as a Home2 Suites as part of Hilton’s extended stay portfolio.

The developer touts the location on its website as a “quick five-minute Uber ride from John Wayne Airport” near more than 23,000 businesses in Irvine. It lists the University of California, Irvine; Edwards Lifesciences; Blizzard Entertainment; Broadcom and Glidewell Laboratories among top nearby demand drivers for the hotel.

Office Nixed

Hines acquired the 17850 Von Karman site when it bought 2300 Main St., an adjacent 132,000-square-foot office that it sold in 2018 for $46.6 million.

The proposed hotel site sits behind the Hyatt House Irvine/John Wayne Airport, a 149-unit hotel that opened in 2018.

The site is located on the opposite corner as the just-traded Inersect office campus (see story, this page). Hines and Oaktree kicked off plans to develop the lot into a nine-story office in 2014; the developers said they wouldn’t break ground without tenants signed up. Tenants were never announced.

While signage for the office project remains at the development site, sources tell the Business Journal that the proposal was scrapped last year amid the tumultuous office market caused by the pandemic.

Hotel Rebound

Hilton counts more than three dozen hotel properties in Orange County, including two Home2 Suites hotels in Garden Grove and Anaheim. The proposed property in Irvine will be the largest for the brand locally, and will also have a rooftop bar, planning documents indicate.

It’s the first area development for RK Hospitality; other regional projects it was worked on include hotels in Burbank and El Segundo, according to the company’s website.

The developer appears to be betting on the stability of the office base within the Irvine Business Complex to support the new hotel.

Passenger traffic at John Wayne Airport is now above pre-pandemic levels.

Airport data indicated that May was a record month for John Wayne Airport, with north of 1 million passengers having flown in and out of the airport.

Airport Additions

Plans for the new Home2 Suites come amid a new entry to the airport area hotel scene: the 124-room Element Irvine.

The extended stay hotel started construction at the end of 2019 at 17662 Armstrong Ave., less than a mile from 17850 Von Karman, and will open this month under the Marriott brand.

Also finishing construction in the area is Sonesta Irvine, which will take the wraps off its renovation and rebrand from the Wyndham Irvine next month.

In other area hotel updates, the future of Hotel Irvine, among the most notable airport area properties, is still up in the air after the 536-room property closed during the pandemic. It has yet to reopen.

About a year ago, Irvine Co. said it was seeking “world-class” hotel companies to operate both Hotel Irvine and the 295-room Fashion Island Hotel; the latter will debut as a Pendry property next year, while a new brand has yet to be announced for Hotel Irvine.

The new operator will lease the hotel from Irvine Co., which will maintain ownership of the property.

Intersect Offices Sell for $23

The Intersect office complex in Irvine has sold for $235.3 million in the highest-priced local office transaction in two years.

The deal comes about three years after the sellers, a joint venture between the local office of Houston’s Hines and Newport Beach-based Pacific Investment Management Co. first listed the 454,000-square-foot property for sale, at a reported $260 million price.

The campus sold to a venture between MetLife Investment Management and Dutch investment firm PGGM.

The $518 per-square-foot sales price is a 94% premium to the previous sale of the four-building office campus—then called Quintana—in 2015.

The four-building campus, near the intersection of Main Street and Von Karman Avenue, underwent a $27 million overhaul into a creative office project.

The office is now reported to be 85% leased to tenants including fitness franchise owner Xponential Fitness Inc. (NYSE: XPOF). It was largely empty at the time of its last sale.
JLL, also a tenant at the complex, brokered the deal and secured $118 million in acquisition financing.

The office complex was pulled from the market in 2020 amid a choppy and uncertain investment market for commercial real estate properties caused by the pandemic; instead, Hines and Pimco refinanced the property in a $182 million loan financed by a unit of the new owner, MetLife.

—Katie Murar

Want more from the best local business newspaper in the country?

Sign-up for our FREE Daily eNews update to get the latest Orange County news delivered right to your inbox!


Featured Articles


Related Articles