Hillman Unable to Obtain Loan for 2nd Office Tower
Hillman Properties said Monday that its Stadium Towers Plaza office building near Anaheim Stadium is now 90% leased, but the developer says it still hasn’t been able to get a construction loan to build a second office tower next door.
Hillman persuaded several tenants recently to sign up for another 40,000 square feet in the 12-story, 270,000-square-foot building. They include Bank of California, which will have its name on the building.
Hillman took out a building permit from the city of Anaheim several months ago because it was close to getting a construction loan for the second, identical building, the developer said.
But the loan fell through. Now the developer is trying to sign enough tenants ahead of construction to persuade a consortium of banks to give the developer a loan.
Burned by bad real estate loans and prodded by cautious federal regulators, banks have cut back their real estate lending severely after funding an orgy of commercial building with the savings and loan industry in the 1980s.
Most of the nation’s office markets are overbuilt and property values are falling. Orange County’s office buildings have had vacancy rates of slightly more than 20% for years.
But in Central Orange County, new office construction had stopped by late 1988, because half a dozen or so big office towers opened at the same time demand for office space had already started to slide. It took some time for demand to catch up with new office towers in Santa Ana and Anaheim; Stadium Towers, for instance, opened in 1988 and only recently came close to being fully leased.
Plans for several other office buildings, including an IDM project in Anaheim and Koll Co. and Birtcher projects in Orange, have been put on hold.
Nevertheless, the market is getting tighter and brokers say there is scarcely a whole floor of space in any of the area’s office buildings. Vacancies in the bigger, newer office buildings here are down to about 10%, brokers say. And only one office tower, the Bentall Executive Center in Santa Ana, is scheduled to open anytime soon.
“The Central Orange County office market is nearing supply-and-demand equilibrium,” said Hillman Vice President Dwight R. Belden, who said top-quality office space in the area is “rapidly diminishing.”
Belden said the company would like to have the second building completed by the fall of 1992, but that depends whether it can get a loan soon.
Besides Bank of California, the new tenants at Stadium Towers are Disneyland’s employee relations group, the Orange County office of U.S. Sen. John Seymour and Simon Marketing, a promotions company.
Hillman Properties, one of the nation’s larger developers, is the Newport Beach development arm of Pittsburgh’s Hillman Co., a privately held investment firm.
