A commercial and residential development with the potential for a couple of high-rise towers could be built on land surrounding the Santa Ana headquarters of the Orange County Register, according to the high-profile building’s new owner.
Mike Harrah, the largest commercial property owner in Santa Ana, last week closed on the purchase of the five-story Register headquarters building on Grand Avenue.
The 173,000-square-foot building sold for about $27 million in a deal brokered by the Newport Beach office of CBRE Group Inc.
The sale works out to a price of about $156 per square foot for the office, which is just off the Santa Ana (I-5) Freeway near the Costa Mesa (55) Freeway.
Freedom Communications Inc., the owner of the newspaper and seller of the office, will continue to occupy the building under a 20-year lease-back agreement, Harrah said last week.
“They need to be somewhere, and they needed to get some capital,” Harrah said of Freedom and the Register, which has been headquartered in the building since it opened in 1986.
Terms of the leaseback with Freedom, which last week also announced the shuttering of its nascent Los Angeles Register newspaper and 29 layoffs in cost-cutting moves, were not disclosed.
Excess space at the building had been listed for lease at a monthly rent of $1.85 per square foot, according to CoStar Group Inc. data.
A lease near those terms would equate to annual rent of about $3.8 million for the entire building.
Land directly along Grand Avenue that could be the site of a small retail center also was included in the office sale to Harrah, who said the replacement value of the Register building is about $63 million.
It is the largest purchase in Santa Ana reported in years for Harrah and his Caribou Industries, which has bought and renovated more than 4 million square feet spread over about 80 buildings near the city’s civic center and downtown.
Redevelopment
Harrah made his mark in the 1990s buying and restoring a number of buildings during a redevelopment of downtown Santa Ana. Many of the buildings are now leased to government entities.
A similar redevelopment plan now is being considered for the area surrounding the Register building, which sits just off the freeway near a proposed new light rail station and has “access second to none,” according to Harrah, who sees the site as a gateway to the city.
More deals are on the way, according to Harrah, who also is eyeing roughly 15 acres of land surrounding the Register building for a mixed-use development.
“This is just the first phase,” Harrah said of the office purchase.
William Lyon Homes
Freedom still owns those 15 acres, which include the paper’s printing press. Late last year, the publishing company entered into an agreement to sell the land to Newport Beach-based William Lyon Homes, with the expectation of residential development on the property.
A deal with the homebuilder—estimated at the time to be in the $40 million range—has not been completed. Documents show the purchase and sales agreement for the land runs through the end of 2015.
Harrah said talks are under way with William Lyon Homes that could see the homebuilder remaining involved in a residential project even if the land ends up going to Caribou Industries.
Early-Stage Plans
Harrah’s early-stage plans for the land include mixed-use development. A pair of 25-story residential towers is a potential option for the site, although those plans are preliminary and would need approvals from the city, Harrah said.
“I believe the city is going to work with us,” he said.
Harrah said the high-rise plans are part of his vision of “the vertical urbanization of downtown Santa Ana.”
The first step in that plan is the construction of his long-awaited One Broadway Plaza office tower on land about a mile from the Register building.
The 37-story office, delayed for several years amid the last recession and subsequent downturn in the local office market, would be Orange County’s tallest building.
Harrah said he’s nearing a deal with an undisclosed anchor tenant for the more than 500,000-square-foot building, which could result in construction beginning in earnest in February. It will take about three years to complete the project, he said.
Other notable projects outside OC that Caribou has under way include sites in the Mission Valley of San Diego, Lake Havasu in the Inland Empire, and Hawaii.
