Irvine Company plans to build a 19-story office building next to its existing Newport Center headquarters beginning early next year.
The office, located at 520 Newport Center Drive, is slated to total about 300,000 square feet. Construction should be completed in 2014, according to the Newport Beach-based real estate investor and developer.
The building will go up about two blocks from the 20-story office that is now being built for investment manager Pacific Investment Management Co. at Newport Center, the high-end office market that surrounds the Fashion Island shopping center. The two buildings will be the most prominent offices to go up in Newport Beach in nearly 30 years.
Irvine Co. is still evaluating leasing plans for the 520 Newport Center Drive office. The company—Orange County’s dominant real estate company and landlord—is considering moving part of its own operations into the new building, according to Donald Bren, Irvine Co.’s chairman.
“Similar to Pimco, which is expanding their [local] presence with the building of their new headquarters at 650 Newport Center Drive, our long-term desire is to maintain our corporate headquarters and operations here in Newport Center,” Bren said.
Irvine Co.’s corporate operations are now spread between Newport Center and University Research Park in Irvine, where the privately held company’s retail, office and apartment divisions moved in 2004.
The company said it plans to evaluate its space efficiencies as it proceeds with plans for 520 Newport Center Drive.
If Irvine Co. opts to lease out space at the new building to other tenants, it will likely try to do so at a rental rate among the highest of any building in OC.
Newport Center Drive
Newport Center Drive ranks as the ninth most-expensive street for office tenants in the U.S., according to a report last year from Chicago-based brokerage Jones Lang LaSalle.
Irvine Co.’s website lists monthly rents at other buildings it owns in the area as high as $5.25 per square foot. Newport Center Drive offices average monthly rents of about $4 per square foot, according to Jones Lang LaSalle.
In theory the addition of the 520 Newport Center building, combined with existing space that Pimco vacates as it moves to its new headquarters in 2014, could provide some softness to the upscale Newport Center office market in a couple years.
That’s why it makes sense for Irvine Co. to at least temporarily consider moving operations it has at University Research Park—where there’s little vacant space—to the new office, said Randall Parker, president of Travers Realty Corp., a tenant brokerage that has local offices in Newport Beach.
“They have a built-in tenant that can fill the building until there’s a more robust market,” said Parker, whose company represents several larger clients based in Newport Center. “It mitigates any risk—it’s a smart call.”
There hasn’t been a sizable office in Orange County to break ground on a speculative basis in nearly five years.
Irvine Co. has other speculative office projects on the books in other markets where it operates. Those include an office campus called Santa Clara Gateway that’s seeing its first phase of construction, totaling about 447,000 square feet, under way in the Silicon Valley.
Pei Cobb
The 520 Newport Center Drive building will go up on land that now holds a surface parking lot, in between a pair of nine-story offices at 500 and 550 Newport Center Drive. The cost of the project is unknown.
Some ground-level space at the two existing offices could be altered to make way for the new building, which has been designed by Pei Cobb Freed & Partners Architects LLP of New York.
Pei Cobb Freed also is handling design for the new Pimco headquarters building, which Irvine Co. owns and is developing for Pimco—the world’s largest bond investor and part of Allianz SE in Germany.
City filings also show plans for a new, multilevel parking structure to be built to accommodate the new 520 Newport Center Drive office and the two nine-story buildings on the block.
Decades-Old Plan
Plans for a taller office building at the site of the planned new construction have been envisioned since the 1960s, according to Irvine Co. officials.
The new high-rise first was contemplated in early planning renderings by architect William Pereira, who worked on the 1960s master plan for the Irvine Ranch and also established the architectural style for Newport Center.
Meantime, the latest plans arise during a busy period of construction for the area around Fashion Island—much of it led by Irvine Co. The company has put close to $100 million into upgrading its Fashion Island shopping center during the past couple years, including adding a new movie theater complex, retail stores and restaurants, and a Whole Foods Market that’s expected to open in about a month.
Also in Newport Center, a new city hall for Newport Beach is expected to be soon completed, along with an expansion to the city’s central library and a 16-acre park.
Irvine Co. also is considering turning San Joaquin Plaza—an older, low-rise office complex it owns near the intersection of San Joaquin Hills and Jamboree roads—into an apartment complex in a few years.
