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Thursday, Jul 18, 2024

Santa Ana’s Wells Fargo Tower May Go Residential

Another local office-to-residential conversion is in the planning stages for a 12-story office tower in Santa Ana.

Core Development Group, a Mahwah, N.J.-based clean energy developer, recently submitted plans to the city planning department for a 162-unit apartment complex on the 4.5-acre site at 2700 N. Main St.

The property, also known as the Wells Fargo Building, runs 120,560 square feet adjacent to MainPlace Mall. The plans for the apartment complex also include 5,000 square feet of ground-floor retail space and a nearly 7,000-square-foot roof deck.

The existing tower will transformed, in what officials call an adaptive reuse project, into Arthouse on Main. It joins a host of multifamily conversion projects in the city, some of which are less than a mile away.

Core is heading the project while Los Angeles-based SODA is handling design.

Building Sale History

This conversion isn’t the first time the Wells Fargo Building site has been eyed for multifamily development.

A two-building “urban village” was previously planned for the site in 2017 by then-owner PRES Companies, an Irvine-based real estate investor and operator. That project, dubbed 27 Hundred, called for the redevelopment of the Wells Fargo Building and the construction of a 247-unit residential component.

Plans for the project, however, fell through. PRES then sold the property in January to Core for $18.6 million, a 9.3% discount from what it bought the office for in 2016.

Core’s proposal for the Wells Fargo Building reflects the troubled office market—the result of slow return to in-person work.

Valuations for office properties in Orange County have halved since the pandemic, which has prompted developers to convert them into other uses.

Residential has been an especially popular use among developers due to the high demand for homes in California, as well as pressure from the state government on cities to create more residential units to alleviate the housing shortage.

Vacancies among office properties remain high. The vacancy rate across OC was 14.3% in the first quarter, “virtually unchanged” from the quarter prior, according to data from CBRE Group Inc. The rate has steadily risen since 2020, when it was just above 10% early that year.

The Wells Fargo Building is currently about 70% leased. Tenants include Wells Fargo, SpineZone and Sun West Mortgage.

MainPlace Transformation

Next door to the Wells Fargo Building is MainPlace Mall, which is currently undergoing a massive mixed-use redevelopment.

The plans allow for 1,900 residential units, 400 hotel rooms, 1.4 million square feet of retail and commercial space and 750,000 square feet of office space.

Last October, the project’s first apartment complex, Paloma, delivered 309 rental units.

Los Angeles-based commercial real estate developer Lowe is heading the multifamily projects and is working on its second apartment complex, which totals 410 units on a 3-acre site.

The units are going up on a parking lot near the mall’s Nordstrom store, which shuttered in 2017.

As of May, the demolition of the Nordstrom store was halfway complete.

Other Conversions

Across the city, near the border of Costa Mesa, the Segerstrom family—whose firm runs some of Costa Mesa’s most valuable commercial properties—is planning to convert their 17.2-acre shopping center across the street from South Coast Plaza, into a mixed-use hub.

The project, dubbed The Village Santa Ana, entails 1,583 residential units, up to 300,000 square feet of office and up to 80,000 square feet of retail space.

Plans are currently under review by the city, which updated the project’s online status last month.

Another Santa Ana project whose construction timeline is even more uncertain is an office-to-residential conversion by Newport Beach-based real estate investment firm Arrimus Capital.

The estimated $90 million development, dubbed the Addington, would turn an 81,000-square-foot office building less than a mile from the Wells Fargo Building, across the street from the Discovery Cube, into a 498-unit residential project.

The newest plan, proposed last October, takes on a long-standing dispute between Arrimus, city officials and some of its residents.

The firm, however, is bullish that the new proposal will be approved, despite prior nixed plans, due to a new state law that aims to spur housing development, according to officials.

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