The opening of new headquarters for two of Orange County’s better-known companies helped the area’s commercial development sector top a square footage mark not seen in six years.
The county’s largest office, industrial, retail and hotel developers completed 1.6 million square feet of projects here over the course of the past 12 months, according to this week’s Business Journal list.
That’s nearly 1 million square feet higher than last year’s total and marks the second year in a row that the amount of completed commercial development in OC increased.
The list also represents the first time since the county began digging out of the rubble of the Great Recession that completed commercial development here has topped the 1-million-square-foot mark.
The first six companies on the list are ranked by the square footage of projects they completed in the past year. The other six have projects of more than 100,000 square feet under way.
Data used to compile the list are from individual submissions, CoStar Group Inc. data, and Business Journal research.
A pair of long-awaited offices helped boost this year’s square footage for completed projects.
• The new Fountain Valley headquarters for Hyundai Motor America Inc., at 469,000 square feet and with an estimated $150 million construction cost, is the largest new office to open in OC in seven years.
The building, designed by architecture and design firm Gensler Newport Beach, was developed in-house, giving the carmaker the top spot on the list.
It was built over a two-year period on an 18-acre space just off the San Diego (405) Freeway where Hyundai’s old headquarters sat, built to environmentally friendly design standards and with space for up to 1,400 workers. The company’s old building held just 800 employees.
• Also opening its doors recently was 650 Newport Center Drive, the Newport Beach office holding the headquarters of Pacific Investment Management Co.
The 380,000-square-foot building is the first new office tower to open in glitzy Newport Center in nearly 30 years.
The 20-story office could also be—for now—Orange County’s most valuable for-lease office, thanks to its high-profile Newport Center location and a long-term lease signed by the bond giant (see related story, page 1).
Newport Beach-based Irvine Company developed the tower and also has a second 21-story office under construction down the street at 520 Newport Center Drive that’s being built on a speculative basis and is scheduled to open near the end of the year.
The completion of the Pimco office, along with a few smaller retail and restaurant buildings it opened last year at Fashion Island, gave OC’s dominant office landlord the No. 2 spot on the list with a total of 413,500 square feet completed.
Other companies at the top of the list represent the benefits of being an early mover.
• “We got in early in this cycle. A lot of eyebrows were raised when we started building,” said Bob Olson, chief executive of Irvine-based R.D. Olson Development.
The developer ranks No. 4 on the list with 199,000 square feet of completed projects.
Last summer, California’s most active hotel developer for several years running opened Tustin Pacific Center, a $60 million two-hotel project next to the Costa Mesa (55) Freeway.
The center is the first new hotel development in Tustin in more than 15 years.
The project and other recently completed hotels in a variety of markets, including San Juan Capistrano, Oceanside, Santa Barbara and Hawaii, were given the green light when debt wasn’t readily available for hotel development, Olson said.
R.D. Olson was able to get financial backing then, thanks to a strong track record getting projects completed on time and on budget, he said.
The developer has a sister company, R.D. Olson Construction, that handles construction for its projects. That Irvine-based company ranked No. 13 on this week’s Business Journal list of top local construction companies (see list, page 36).
“Hotels are in the limelight right now, but that wasn’t the case three or four years ago,” said Olson, whose company broke ground this month on Paséa Hotel & Spa, the 250-room hotel component of the long-awaited Pacific City development in Huntington Beach.
The company also has a 210-room Courtyard by Marriott being built in the Irvine Spectrum. The project is expected to open next year, and the developer is in talks to build another Spectrum hotel nearby the following year.
• Western Realco, an industrial developer in Newport Beach, also continues to see the benefits of being out front of local opportunities.
The company late last year completed a 210,000-square-foot building on Cerritos Avenue in Anaheim, the largest speculative industrial property developed in OC in several years.
That building’s completion gave the developer the No. 3 spot on the list; last year it held the top spot after completing 193,000 square feet of industrial buildings in Brea and Tustin.
Opening new industrial buildings in a tight market for higher-end warehouse and distribution space has paid off. The Anaheim speculative building sold this year for about $27.2 million, or about $130 per square foot, to Regal Logistics, a Fife, Wash.-based third-party logistics provider.
Western Realco and its financial partners bought the Anaheim land last year for about $7 million, according to brokerage data.
The developer remains on the lookout for more opportunities in the area, but there’s heavier competition for land than there was a few years ago, Gary Edwards, a Western Realco principal, told the Business Journal in April.
“It’s become more difficult,” he said. “Others that had been on the sideline are getting back in the game.”
The developer is working with the city of Brea to get entitlements for a three-building project it expects to be about 375,000 square feet and is also scouting a few other local deals.
