Emile Haddad caught the big fish in Orange County’s office market last year.
He convinced Broadcom Corp., Orange County’s largest office tenant, to build a 72-acre headquarters campus at the Great Park development in Irvine.
The deal made Haddad an easy choice for our Business Person of the Year in real estate.
It also ended several years of speculation and leads to a series of events that are likely to have a huge impact on the region’s office market and construction industry for years to come.
FivePoint’s 3,700-acre site, which largely surrounds the 1,300-acre Orange County Great Park, is entitled to hold about 9,500 homes, in addition to nearly 5 million square feet of commercial and retail development.
Now the commercial portion of the equation has an anchor in Broadcom.
“It’s a big validation of the (Great Park) project itself,” said Haddad, chief executive of Aliso Viejo-based FivePoint Communities, which runs Great Park Neighborhoods, shortly after announcing the Broadcom deal.
“There’s always been a lot of focus on housing (here), but now people will be focused on companies and jobs,” he said. “We’re trying to build a model (balance between) jobs and housing.”
Broadcom announced a deal in November to buy the land at the Great Park site. The chipmaker plans to build a 1.1-million-square-foot campus but could expand to up to 2 million square feet if needed.
It currently leases about 920,000 square feet at its 7-year-old campus in University Research Park in Irvine, about nine miles from the Great Park site.
The plans for 1.1 million square feet would roughly parallel the combined square footage of the three largest offices to open in OC over the past six years—high-rises at 520 and 650 Newport Center Drive in Newport Beach, and the Fountain Valley headquarters of Hyundai Motor America Inc.
Terms of Broadcom’s land purchase, which is expected to close in the first quarter of 2015, haven’t been disclosed.
Construction
The initial slate of construction, assuming a building cost of $300 to $350 per square foot, would run the chipmaker, whose market value is $25 billion, roughly $350 million.
Broadcom expects construction to begin in the first half of 2015 and the first phase of development to be ready for occupancy in 2017.
The campus is being designed by San Francisco-based architecture firm Gensler and will be built by DPR Construction in Redwood City. Both companies have offices in Newport Beach.
Latest Milestone
The Broadcom deal marks another milestone for Haddad at the former El Toro Marine Base in Irvine, one of the largest remaining developable land sites in the county.
Haddad, former chief investment officer at homebuilder Lennar Corp., was our Business Person of the Year in 2006, along with Lennar Chief Operating
Officer Jon Jaffe following the Miami-based company’s purchase of the Great Park land.
Home sales at Great Park Neighborhoods, after years of recession-related delays and a move by Haddad from Lennar to FivePoint, kicked off in 2013.
The first phase, the 726-home Pavilion Park, is nearly sold out, making it one of the country’s best-selling new masterplanned developments.
A second batch, with 960 homes, will kick off later this year on the northwestern edge of the former Marine base. The homebuilders tapped for that project should be announced any day now.
The lot sales could bring in $325 million to $350 million for the developer, assuming an average per-lot price in the $325,000-or-higher range, according to estimates by real estate sources.
The commercial construction involving Broadcom will start close to the Irvine train station near the southern edge of the base.
Broadcom’s commitment to the site “activates a lot of opportunities near the train station” in terms of shops, restaurants and other retail amenities, Haddad said.
More Deals?
More deals could be coming in 2015.
This “is the first of several announcements,” he said. “We still have many more acres that could hold” offices.
Haddad and FivePoint, which was spun off from Lennar in 2009, made moves of their own in 2014.
The developer increased its stake in Heritage Fields LLC, the investment group backing Great Park Neighborhoods.
An investment group led by FivePoint bought a 12.5% stake in the venture previously owned by Boston-based investment firm Rockpoint Group LLC.
Terms of the buyout were not disclosed, but the deal makes FivePoint one of the largest investors in the 3,700-acre Great Park Neighborhoods, according to Haddad.
The stake acquired from Rockpoint would appear to be valued at $100 million or more, based on the last financing deal reported for Heritage Fields, struck in late 2010.
