Word in March that a high-rise tower is getting built in Newport Center for Pacific Investment Management Co. was a boost to Orange County’s otherwise dormant office development market.
Whether that’s a sign of things to come for build-to-suit office developments here remains to be seen, according to market watchers.
“The market is still soft, but if you’re a tenant looking for space north of 200,000 or 300,000 square feet, you have limited options,” said Royce Sharf, executive vice president for the Irvine office of tenant brokerage Studley Inc.
“Pimco is a good example that if you’re (a large business) with specific needs for facilities, a build-to-suit can make sense, if you can find the land,” Sharf said.
Pimco struck a deal with Newport Beach-based developer and landlord Irvine Company to have a 380,000-square-foot headquarters built for it near the Island Hotel Newport Beach.
The proposed building—at 650 Newport Center Drive, the site of the former Twin Palms restaurant—will go up a few blocks from Pimco’s existing headquarters, which Irvine Co. bought late last year.
Construction on the 20-story tower is expected to finish by mid-2013.
It’ll be the largest build-to-suit project to open since 2008, when Newport Beach-based Pacific Life Insurance Co. cut the ribbon on a nine-story building in Aliso Viejo. The nearly 250,000-square-foot office serves the bulk of the company’s life insurance division.
In the past dozen or so years, OC’s office market has averaged a little less than one big build-to-suit project per year, with Broadcom Corp.’s nearly 700,000-square-foot campus in University Research Park in 2007 the largest.
Other companies going the same route included Costa Mesa-based Emulex Corp., Aliso Viejo-based QLogic Corp., Santa Ana-based First Ameri-can Financial Corp., and Los Angeles-based Capital Group Cos.
Construction, land and leasing costs could prompt a few more companies to consider similar ventures going forward, according to local brokers.
The largest name said to be considering building their own headquarters is Irvine’s Blizzard Entertainment Inc., according to real estate sources. A campus for the online video game juggernaut likely would total more than 700,000 square feet.
One constraint facing tenants right now is a relative lack of land, Studley’s Sharf said.
Other than Irvine Co. land and Hines Interest LP’s proposed California Green project in Irvine, most big sites still are a few years away from supporting commercial development. That includes big chunks such as Tustin Legacy and the Great Park Neighborhoods in Irvine.
—Mark Mueller
