Speculative development isn’t a dirty word anymore for area commercial real estate developers.
A yearslong trend of modest amounts of new construction has given way to a bevy of office, industrial, retail, hospitality and projects breaking ground across OC.
All of that goes with an already-busy slate of apartment construction.
Developers are moving ahead on some of the bigger projects without having a tenant in tow, as seen with a 21-story office the Irvine Company has in the works in the Spectrum. It will be the largest office in that market, at about 450,000 square feet.
The last time the region had this much new construction under way was just prior to the Great Recession.
That building boom didn’t turn out too well for many area developers, to say the least, but it’s not stopping companies from giving speculative construction another go as 2015 approaches and forecasts call for robust job growth during the year.
Company to Watch
DJM Capital Partners Inc.
DJM Capital’s leasing activity at its new Pacific City shopping center in Huntington Beach will provide a good barometer of the demand for traditional—and nontraditional—retail space in Orange County amid the improving economy.
The San Jose-based developer is moving along with construction of the 191,000-square-foot open-air mall on Pacific Coast Highway that it took over in 2012 after years of delay under prior ownership.
The project is one of three big retail developments under way in OC, along with The Source in Buena Park and Steve Craig’s Outlets at San Clemente Plaza.
The Pacific City project—with an estimated construction cost of about $130 million—is set to open this fall. It has one big tenant announced so far—Equinox.
Several smaller tenants have also been announced for the center’s Lot 579, a 35,825-square-foot mix of boutique eateries and vendors that’s looking to stand out among OC’s growing list of hip food spots.
DJM also expects a busy 2015 in Newport Beach, where it is moving ahead with the redevelopment of Lido Marina Village, a roughly 125,000-square-foot waterfront project the developer bought in 2012.
Person to Watch
Arte Moreno
The owner of the Angels baseball team has moved into the latter innings of his lease negotiations with the city of Anaheim.
The Angels can opt out of their current stadium lease as soon as 2016 or as late as 2019—options that have led to plenty of speculation over a possible relocation of the team, with Tustin, Irvine and locations in the Inland Empire mentioned as potential landing spots.
The current lease in Anaheim would extend through 2029 if the Angels do not opt out.
The Angels ended negotiations with the city of Anaheim in September after months of seeking a deal that would give Moreno the right to develop vacant land around the stadium at favorable terms in return for a long-term commitment to stay in the city.
The fate of the stadium could play a large part in other developers’ plans in the Platinum Triangle. Retail, office and for-sale housing projects will likely be delayed until the Angels’ fate is determined.
Our best guess for 2015: No new agreement is reached during the year in Anaheim or elsewhere; serious negotiations ramp up for at least one other OC site for a stadium; and the Angels get a new manager.
