The 1901 Main St. building in Irvine could become the first high-rise office near John Wayne Airport to be converted to residential uses, if early-stage redevelopment plans move ahead.
City records indicate that J+R Group LLC, the owner of the eight-story office near the intersection of MacArthur Boulevard and Main Street, a few blocks from the airport, have filed a proposal to convert a portion of the 173,000-square-foot office building to 76 residential units.
The proposal, filed in January, would turn “several floors” of the office building to residential units, filings indicate.
A separate, detached apartment project is also being eyed for land next to the office, city filings indicate.
The office property, which also includes a five-story parking structure, along with a surface parking lot, is located on nearly 5 acres.
A time frame for the development moving ahead hasn’t been disclosed.
$66M Buy
J+R Group, an Irvine-based real estate investor that has other commercial real estate holdings in the city, bought 1901 Main St. in 2016 for $66 million.
The deal, among the largest office sales in Orange County that year, worked out to a price of about $382 per square foot for the building, which was said to be fully leased at the time of the 2016 sale.
Records from real estate market tracker CoStar Group now indicate that the office is now about 80% leased. The building’s directory curently lists four tenants in the building, including J+R Group, which has a first-floor space. Others in the office are Morgan Stanley, BSH Home Appliances, and semiconductor firm Synaptics. JLL handles the leasing for the office.
At the time of the 2016 purchase, the deal was cited as the largest in OC to date for J+R Group, which helped spearhead the recent development of Collage, a two-story, roughly 16,000-square-foot collection of restaurants at the Bloomingdale’s area of South Coast Plaza.
J+R Group has found success in recent years getting entitlements for other apartment projects at properties it owns in the airport area of Irvine.
The company could not be reached for comment on its conversion plans for the 1901 Main building, which sits close to several other housing projects that have been built in recent years, at former low-rise, commercial sites.
The 1901 Main building has undergone a sizeable renovation since its 2016 acquisition, as has its parking structure, much of which is now used as a storage area for new Tesla vehicles, prior to their delivery to customers.
Rising Vacancy
The office market in the airport area of Irvine, which runs about 24 million square feet, ended 2023 with a vacancy rate of over 17%, according to data from Newport Beach’s Voit Real Estate Services.
For Class A buildings in the airport area, which holds OC’s largest collection of high-rise offices, the vacancy rate is even higher, at nearly 22%, Voit’s data shows.
OC’s office market as a whole, which runs some 104 million square feet, ended 2023 with a vacancy rate of nearly 17.3%. A healthy office market, one where developers are comfortable building new office products, is generally considered to be when occupancy tops 90%.
Few Local Projects
Despite rising vacancy rates for office towers since the onset of the pandemic, and limited vacancy rates for apartments in OC—now less than 5%, according to data from RentCafe—there’s been few local efforts at converting underutilized office buildings to residential.
The most prominent conversion example seen in the county to date was in downtown Santa Ana, at a 10-story office building on North Main Street long used by the Social Security Administration.
Calabasas-based Alliant Strategic Development in 2022 converted the office building into a 148-unit rental project, now called 888 on Main.
Monthly rents there currently start around $2,200 for a one-bedroom unit, according to the complex’s website.
A variety of factors can play into whether older offices can be repurposed into housing, according to a late 2023 study by architecture firm Gensler, which says it has assessed the viability of this type of conversion at over 1,000 sites in North America the past few years.
Gensler’s data reveals “that only 25% of the buildings scored make for suitable candidates for conversion,” it says.
“Context, building form, location, floor plate size, and several other factors all play a crucial role in assessing a building’s aptness for conversion,” Gensler officials said in a report last October.
