Office projects continued to drive commercial development in Orange County last year, and not just in the county’s largest office market.
Irvine—in particular the Spectrum area—still held its share of office openings over the year ended April, thanks largely to Newport Beach-based developer Irvine Co., but other cities had significant activity.
Fullerton saw the opening and subsequent sale of the largest new industrial project in Orange County in several years, and a notable ground-up creative development took flight in Tustin.
The 10 largest office, industrial, retail, and hotel developers completed about 4.2 million square feet of ground-up projects and large renovation projects here in the last year, based on this week’s Business Journal ranking.
That’s slightly up from the 4 million square feet that 12 developers opened the year prior.
Seven of the 10 developers on this year’s Business Journal list weren’t on the prior year’s ranking and represent close to half of the total square feet that was developed in Orange County in the past year.
Industrial Success
Newport Beach-based industrial developer Western Realco finished its 1 million-square-foot project in Fullerton in December, Beckman Business Center, which was sold to a handful of new investors and owner-users a short time later.
Western Realco bought the site—the former home of Beckman Coulter Inc.—in 2015 and 2016 in a pair of transactions, and began construction work in the later part of 2017.
Company executives said the entire development’s cost was roughly $130 million, which was largely paid for when San Francisco-based Prologis Inc. bought the three largest buildings at the development for about $124 million around the end of last year.
At nearly $186 per square foot, the deal is among the priciest on a per-square-foot basis for a larger-sized, unoccupied industrial building in Orange County.
Beckman Business Center runs about 44 acres at the intersection of Harbor Boulevard and Lambert Road near the Fullerton and La Habra city lines.
The last remaining building at the business park sold in March for $16.5 million to an Orange County investment firm listed as Laguna Canyon Plaza LLC, with Timothy O’Neil as the true buyer according to property records.
Other companies and investors that bought into the project include two owner-users: A.J. Kirkwood & Associates, an electrical contracting firm based in Tustin, and Achem Industries America Inc., a Cerritos-based maker of tape and other packaging products.
Bukewihge Properties, a private investor, bought two buildings there as well.
Flight Takes Off
Orange County’s first substantial ground-up creative office campus, Tustin’s Flight project, opened in March.
The first phase of the development includes an eight-building collection of offices, a 12,000-square-foot food hall, and meeting space about 470,000 square feet in total. It’s the first sizeable office project to open near John Wayne Airport in over a year.
Upon completion, Flight will be the largest office park in Tustin, and is also the largest commercial project to be built on the city’s former Marine base in about a dozen years, since The District at Tustin Legacy shopping center opened its doors.
The project’s developer, the Costa Mesa office of Dallas-based Lincoln Property Co., is No. 3 on this year’s list.
Lincoln and Boston-based real estate private equity firm Alcion Ventures LP bought the 17.5 acres holding the first phase of development in 2016 for a reported $26 million. They have a few years to close on the second parcel that can accommodate nearly an additional 500,000 square feet of buildings.
Work Well Win, a Greenwich, Conn.-based coworking firm, and Costa Mesa e-commerce marketing company Branded Online, are among the first tenants.
What’s to Come
A few questions remain for Orange County’s development industry, particularly regarding new retail projects.
Plans to develop Five Lagunas have been years in the making.
The most recent proposal explored by San Diego-based Merlone Geier Partners, which owns the 68-acre Laguna Hills property, runs the gamut: a 2,100-unit apartment complex with 3,780 parking stalls, 248,000 square feet of retail, a 125-room boutique hotel, and 822,000 square feet of office space across four buildings. Plans haven’t made their way to the city for approval yet.
Another retail question: What will become of the vacant 240,000-square-foot space left by Sears at Costa Mesa’s South Coast Plaza?
The legacy anchor at the mall sold its ownership in 2017 to C.J. Segerstrom & Sons, the operator of the 2.7-million-square-foot shopping center, for $187 million.
The mall owner hasn’t disclosed plans for redeveloping the site, but a litany of potential redevelopment options—ranging from retail uses to high-end housing and hospitality projects—has been suggested as possibilities.
