Irvine Co. Signs PacTel Cellular to $65-Million Lease

The Irvine Co. said Tuesday it has signed a $65-million lease with PacTel Cellular for 10 floors of office space at its Jamboree Center office park next to the San Diego Freeway, the second most expensive lease ever signed in the county.

The signing ends months of speculation in the local real estate industry about where PacTel would relocate.

One of the nation’s largest cellular telephone companies, PacTel had been sought as a tenant by some of the county’s biggest developers. It is thought to be the largest of a handful of big companies recently looking for office space in Orange County.

Such tenants are eagerly sought by local landlords because office vacancy rates are high--about 22% throughout the county--and the large number of buildings available keeps rents down.

PacTel, a subsidiary of San Francisco’s Pacific Telesis Group, will move more than 500 employees from leased offices in Newport Beach and move its headquarters from elsewhere in Irvine to the new building, which is under construction.

The lease--signed Friday--runs 10 years and covers more than 200,000 square feet of office space in 3 Park Plaza, one of three 20-story office buildings at Jamboree Center.

The building is scheduled to open in August. PacTel will take the bottom 10 floors, and the company’s name will be displayed on the building.

The only lease involving a larger sum in Orange County was another Irvine Co. deal, an agreement with computer products manufacturer Western Digital to take 360,000 square feet in Irvine Spectrum, the Irvine Co.’s huge office and industrial park south of Jamboree Center. The Irvine Co. says that lease--signed in 1988--is worth more than $80 million.

The signing continues a remarkable run of big leases signed by the Irvine Co. recently at Jamboree Center, the developer’s last big office park in the Newport Beach-North Irvine area. The company has no land in that area suitable for building another high-rise.

In November, the Los Angeles law firm Gibson Dunn & Crutcher signed a 15-year lease for 111,000 square feet on five floors of the 20-story 4 Park Plaza. That lease is for about $60 million. Also under construction, 4 Park Plaza is scheduled to open in 1992.

And in 1988 the Geneva Cos., which specializes in mergers and acquisitions, leased 100,000 square feet on five floors at 5 Park Plaza for $30 million.

That means all three big office towers at Jamboree Center now have major tenants, although the Irvine Co. is rich enough to have built the three towers before having any large tenants signed up--and indeed had planned to build them before these deals were signed.

“In the last few years, we’ve signed more than a quarter of a billion dollars in big leases,” said Michael T. Lutton, an Irvine Co. vice president. “We’ve dominated the local office market.”

PacTel chose Jamboree Center because it needed a big building. PacTel expects to expand further.

PacTel Cellular serves customers with car telephones. It recently concluded a large deal to provide service in West Germany, which will mean even more growth in its office staff.

“The cellular industry is expected to be one of the super-growth businesses in the ‘90s,” said a prepared statement from Jeffrey R. Hultman, president and chief executive officer of PacTel Cellular, “so we have an urgent need for facilities that will allow us to efficiently expand our operations during this decade.”

That was why an earlier deal between PacTel and Griffin/Related Properties of Santa Ana fell through, Griffin said.

Its Griffin Towers at the Hutton Centre office park in southern Santa Ana proved too small for PacTel’s needs. One of the two 12-story towers was entirely leased, and the other was one-third leased when Griffin and PacTel were near a deal in August, said Roger N. Torriero, a principal at Griffin.

But PacTel realized that the building did not leave it enough room to grow, Torriero said.

“The good part was we were leasing up those buildings very quickly,” Torriero said. “The bad part was we lost a big tenant.”

PacTel was then courted by some of the county’s other big developers, brokers said.

The Irvine Co.’s Lutton said he began talking to PacTel a little more than two months ago.

Jamboree Center also includes two 12-story buildings and a 550-room Hilton hotel. It is not far from the booming office center near John Wayne Airport.

The more lavish buildings a little farther away from the airport--such as Jamboree Center--have proven attractive to a lot of professional concerns, such as accounting and law firms, brokers said.