If you were a commercial developer looking to do business in Orange County in the past two years, you probably had plenty of time to work on your golf game.
The county’s 18 largest office, industrial, retail and hotel developers finished 720,000 square feet of projects here last year, according to this week’s Business Journal list.
That’s less than a tenth of local development seen at the peak of the most recent commercial real estate boom in 2007, when nearly 7.8 million square feet of projects around the county finished up work.
It’s likely little comfort to area developers—or the construction and real estate-related companies that rely on them for business—that last year’s total was 200,000 square feet more than the companies listed completed in 2009.
The good news?
A few large projects appear ready to be kick-started by the end of the year, bringing back cranes, bulldozers and jobs to the area.
Among notable office projects is a 380,000-square-foot high-rise office tower in Newport Center that’s set to be built for investment manager Pacific Investment Management Co. starting this summer.
Hyundai America Motor Inc. also is preparing to build a 470,000-square-foot office at the site of its current Fountain Valley headquarters.
In the industrial sector, close to 900,000 square feet of speculative buildings could start going up in Anaheim by year’s end, according to officials with the local office of Sacramento-based Panattoni Development Co.
A few stalled retail projects, including those at Huntington Beach’s massive Pacific City development, also could see work move ahead in earnest later this year, according to commercial brokerage data.
Few In Progress
While those projects are on the near-term horizon, developers are facing a dearth of in-progress jobs to go with the small number of recently completed projects.
Ribbon cutting ceremonies were in short supply last year, when only six developers on our list reported finishing up a project here.
That’s down from eight openings in 2009 and 18 in 2010.
In addition, only four companies on this year’s list reported breaking ground on projects in the past year.
The largest of the ground-breakings here was for a six-story, 200,000-square foot building going up for Extron Electronics Inc., an Anaheim-based maker of electronics for video display system.
Most of the building is an expansion for Extron. We typically exclude corporate expansions from our list. But the project goes beyond that: Slated to open this year, it includes a 9,000-square foot steakhouse and country music theater.
It’s the only local office larger than 100,000 square feet—or roughly four floors of an average office tower—to break ground in nearly three years, according to commercial brokerage data.
Also going up is a $13 million Residence Inn by Marriott hotel in San Juan Capistrano, headed up by R.D. Olson Development of Irvine.
It’s San Juan Capistrano’s first hotel in 20 years—and one of three hotels in Southern California that R.D. Olson now has under construction.
With such a small sampling of ongoing or recently completed developments, the rest of this year’s list is made up of companies that have been active local developers in the past.
Others have significant projects expected to be built once the market rebounds in earnest.
There were a few bright spots in 2010 for development, with most of them related to the region’s industrial market.
Irvine-based Birtcher Development & Investment Co. took the top spot in this year’s list for an industrial project it finished in Anaheim —a 375,000-square-foot warehouse and distribution building for Anaheim-based grocer North-gate Gonzalez Markets.
It’s the largest single-building industrial building to be built here in more than five years, and one of the larger build-to-suit projects the area’s seen of late. It’s valued at about $40 million.
Northgate signed a 15-year lease for the 21.6-acre property with an option to purchase the building.
Brandon Birtcher, chief executive of Birtcher Development, has his eyes on more build-to-suit projects along the West Coast.
He recently started up a venture called Birtcher Partners, which aims to develop distribution, manufacturing and logistics facilities for corporate clients.
The company’s website says the venture is negotiating to buy more than 1,000 acres of land for potential projects in Los Angeles and Riverside counties, West Sacramento, and Vancouver, Wash.
Industrial development also is behind the No. 3 company on this year’s list, Irvine’s Sares-Regis Group Inc.
The company finished up work on the area’s first speculative industrial project in a several years, a three-building project along Anaheim’s Miraloma Avenue called Canyon Point that totals about 122,000 square feet of space.
Two of those three buildings have been sold to business owners.
Most of the retail development seen here in the last year isn’t reflected on this year’s list. That owes to the recent trend of redevelopment of vacant sites once used by Mervyns, Circuit City, and other troubled retailers into new stores, gyms and other uses. We only included ground-up retail projects on this year’s list.
Fashion Island
The largest of those projects was part of Newport Beach-based Irvine Comapany’s ongoing, $100 million revamp of its Fashion Island Shopping Center, which included the addition of a 138,000-square-foot Nordstrom last year.
That addition was good enough for Irvine Co. to take the No. 2 spot on this year’s list.
This year’s list is perhaps more notable by a few projects not listed.
The Business Journal includes retail, office, industrial and hotel development on the list. Apartment development—a relatively active segment of the market of late, with several thousand units going up in Irvine alone—is not included.
Also not included are hospital, educational and government facilities, which are among the biggest sources of local construction jobs right now.
Walt Disney Co.’s $1.1 billion renovation of its Disney California Adventure theme park—likely OC’s biggest construction project right now—also isn’t included.
Download the 2011 OC’s LARGEST COMMERCIAL DEVELOPERS list (pdf)
