COMMERCIAL
Developers looking to convince businesses about the viability of unbuilt local mega-projects at Heritage Fields and Tustin Legacy have an ally in Orange County’s largest landlord, because it has been through the same situation.
Longtime leasing brokers for Newport Beach-based Irvine Company faced similar issues when they were looking to sign up businesses at then-nascent Irvine Spectrum in the midst of the 1990s recession.
Sluggish market conditions then “were not too far off where they are today,” said Mike Hodges, senior leasing director. OC’s office vacancy rates at the time exceeded 20%, compared to about 18% now.
The difference then was “that you could drop rates and there still was no activity,” said Vice President of Leasing Rick Wandrocke.
Irvine Co.’s office properties leasing department, which oversees about 16 million square feet of office space locally, is feeling better about this cycle.
Along with more centralized operations—due to decisions made earlier this decade to bring most of its property management operations in-house—the other big difference between now and then is the development of the Irvine Spectrum into a viable business center.
“It’s come full circle,” said Mike Santley, senior leasing director.”Before we were out there selling the vision (of the Spectrum), and now we’re living that vision.”
The landlord currently is adding about one new business a week as a tenant in that area. It has about 3,500 tenants in the Spectrum, which offers high-rise space in an area dominated by low-rise office buildings.
Flashier buildings with larger floor plates can be harder to lease, Irvine Co. brokers said.
I met with five of the Irvine Co.’s senior brokers—senior leasing directors Santley, Hodges and Craig Brashier, as well as vice presidents of leasing John Turner and Wandrocke—earlier this month.
Some of their comments were included in a story in last week’s commercial real estate special report.
The five brokers have all been with the landlord for more than 15 years and combined have completed leases totaling more than 62 million square feet.
Among larger success stories, they’ve seen Broadcom Corp. grow from an unknown company moving from Los Angeles to the Spectrum in 1994 to one of the county’s biggest businesses in the Spectrum. It moved again a few years ago to a 500,000-square-foot campus in University Research Park.
When the chipmaker first was looking at space in OC, “we were asking each other ‘who is Broadcom?’” the brokers said.
Buchanan Leases, Sells
Newport Beach-based Buchanan Street Partners said it has leased 500,000 square feet of space in properties it owns outside OC in addition to selling an industrial building in the Inland Empire.
In the largest of the leases, NRG Energy Inc. signed a 10-year lease for 232,000 square feet at the Houston Pavilions, a 550,000-square-foot Texas-based mixed-use project that Buchanan Street invested $47 million in in 2007.
It’s believed to be the largest office lease in Houston in 2009. The $170 million Pavilions project, which opened about a year ago, is now 82% leased, according to the company.
The real estate investment management company also said it helped sell the Centergate Distribution Park in Redlands for $65.1 million. The buyer for the 1 million-square-foot property wasn’t disclosed.
Buchanan Street Partners arranged a $60 million construction loan for the project in 2006, which was built by Chicago-based Higgins Development Partners.
