Loooking at Orange County’s Past Year Sheds Light on ’86 : Office Building Construction

A fresh supply of lower-cost financing sparked a burst of luxury, high-rise office building construction in Orange County in 1985. And the building boom, although at a slackened pace, is expected to continue in 1986.

The 1985 construction frenzy, led by major developers such as the Irvine Co., C. J. Segerstrom & Sons and the Koll Co., added about 6 million square feet in office space to Orange County, according to Coldwell Banker, and caused the county’s average office vacancy rate to soar from 13.1% at the end of 1984 to a projected 19.3% at this year’s end.

Although the building spree brought profits to many contractors and landlords, there were victims of an office space glut. Equidon Investment Builders of Irvine filed a petition in U. S. Bankruptcy Court on Nov. 25 to liquidate its operation. A sister company, Equidon Contractors, which provides contracting services to developers, also is going out of business.

Richard Frick, Equidon’s former general counsel, said earlier in the year that the construction company, which had built about $250 million worth of commercial properties since 1980, had decided to shut down because of “the perception there would be an oversupply (of office buildings) on the market.”

Despite high vacancies, new office buildings will continue to break ground during 1986, said Scott Perley, vice president and resident manager of Coldwell Banker’s Santa Ana office. He estimated that 4.5 million square feet of additional office space would be completed next year and that vacancies would hover at about 20% throughout 1986.

Perley said that while office construction focused on the Irvine-Costa Mesa area near John Wayne Airport in 1985, next year there will be more activity in the central county, including The City shopping center in Orange, Fashion Square in Santa Ana and areas near Anaheim Stadium. Also, the first high-rise office buildings will take shape in the Irvine Co.’s long-heralded Spectrum development in the triangle bordered by the the Santa Ana, San Diego and Laguna freeways in south Orange County.