National developers largely remain wary of new office development, as vacancy rates have struggled to return to pre-pandemic levels.
That doesn’t seem to be the case in Orange County. Local firms have kept a steady pipeline of office projects in the works, with north of 1 million square feet completed over the past year. That development includes a mix of speculative development, primarily in Irvine, as well as substantial build-to-suit projects.
The county’s 19 most active commercial developers reported about 2 million square feet of completed projects for the 12 months ending in April.
That’s nearly twice the amount seen the year prior, according to this week’s Commercial Developers list.
Anduril Move
Recently completed projects run the product type gamut, from an industrial building in Huntington Beach by Sares Regis Group built on land once used by Boeing Co. to a new Finish Line Auto Club in Costa Mesa.
As for those projects under development, offices make up a bulk of local activity.
Newport Beach’s Irvine Co., the area’s most active developer the past decade, took top marks on the list, delivering 300,000 square feet of new office product in the past year, with another 605,000 square feet underway at the company’s Spectrum Terrace and Innovation Office Park projects.
In Costa Mesa, Foster City-based SteelWave LLC and Dallas-based Invesco Real Estate delivered its first 146,000-square-foot phase of The Press, with an additional 494,000 square feet under development.
Anduril Industries struck a deal in early 2021 to occupy the entire 24-acre campus, and has started its move to the site from its Irvine base at the corner of Michelson and Jamboree.
Industrial Conversions
Similar to last year, conversion projects remain top of mind for local developers looking for better returns than underused office properties.
In the largest office sale of the first quarter, Prologis Inc. paid $96 million for Pacific Vista, a five-building office campus totaling about 322,000 square feet. Industrial uses are ultimately expected for the site.
Other nearby office complexes in Lake Forest, including many buildings that previously served as the headquarters campus for Panasonic Avionics, in the past year or so have been sold to make way for new industrial projects by Newport Beach’s Western Realco and Denver-based Black Creek Group.
Other industrial-focused REITs, including L.A.-based Rexford Industrial Realty Inc. (NYSE: REXR), have made similar forays into Central OC of late, snapping up older office complexes in Santa Ana, Orange and Costa Mesa with an eye on eventually converting the sites into industrial uses.
Healthcare Focus
Healthcare appears to be top of mind for developers in 2022.
Orange County has become a hot spot for healthcare development, with a handful of major medical projects either planned or underway in the region, specifically Irvine.
The largest under construction is a $1.3 billion medical complex on a 25-acre site on the north end of the University of California, Irvine campus.
The university and UCI Health are well underway on the three-building complex, which will include a 144-bed, 350,000-square-foot acute care hospital with an emergency room, an outpatient Center for Advanced Care with primary and specialty health services, a Center for Children’s Health, and the Chao Family Comprehensive Cancer Center and Ambulatory Care building.
Elsewhere in the city at the Great Park Neighborhoods, City of Hope Orange County plans to unveil its new outpatient center for cancer research this year.
The under-construction 190,000-square-foot Lennar Foundation Cancer Center will serve as City of Hope Orange County’s primary building for research and clinical trials.
Along with the Lennar-backed medical office facility, City of Hope is in the early stages of building a nearby 170,000-square-foot cancer hospital, the first of its type in Orange County. That stand-alone facility is expected to open in 2025.
About 3 miles away from City of Hope’s project, Hoag Memorial Hospital Presbyterian is looking to potentially add more than a dozen new facilities on its Hoag Hospital Irvine campus, which opened in 2010.
