Santa Ana Sets Sights on Urban Hub

With the approval of a $500-million development that would include the county’s tallest office tower, officials here believe a building boom is underway that could put northern Santa Ana on the map as the region’s next urban headquarters.

The Main Street Concourse is the latest project in Santa Ana’s effort to become Orange County’s urban hub. Already, plans call for a new federal courthouse that may take up an entire city block, a new police headquarters and city jail, and a huge complex of shops, offices and condominiums in southern Santa Ana.

“I think what it means is that right now we are planting the seeds for making Santa Ana the highest-quality urban headquarters that Orange County can ever ask for,” said Mayor Daniel H. Young.

But the project’s backers acknowledge that they still lack funding for the massive construction effort and financial experts question the wisdom of spending vast sums of money on an office tower during difficult economic times.

“It would be hard to envision the demand” for office space, said Mark C. Coleman, real estate services partner at Deloitte & Touche in Santa Ana. “There’s probably more of a demand for other uses. It’s hard to conceive of it coming on right now,” he said.

Nevertheless, Michael Metzler, Santa Ana Chamber of Commerce president, said the city’s new development projects can “change the face of this town.”

Metzler predicted that a new Santa Ana will emerge in several years--one with “gleaming high towers, and clean business parks,” that can bring jobs, which in turn will “have a tremendous financial spinoff to all the people who live in town as well.”

Young said the Main Street Concourse is the shot in the arm the city needs.

“I think that what you’re seeing in Orange County in the way of new projects are very functional office parks, nice and attractive,” Young said. “I don’t think those are going to be or qualify as major urban centers. . . . What defines the Main (Street) Concourse is the potential for pedestrian use. Once it’s finished, a person will be able to walk to work, walk to theater at night, to a movie, to a mall, to your office. It’s all in one.”

Not everyone, however, sees the project as a cure-all.

“I don’t think they’ve given it sufficient thought to make it workable,” said John Acosta, a longtime resident who served on the City Council for nearly 12 years until last November. “If the leaders of the community do not address themselves to the ills of Santa Ana--social issues like crime, gang problems, graffiti--the world’s tallest high-rise will not bring people here.” A big part of the proposed hub concept would be the Main Street Concourse, which is slated to be built across from MainPlace shopping mall. It would be bounded by Santiago Park on the south, the Town and Country shopping center on the north, and a residential complex for senior citizens on the east. Plans for its development were approved unanimously by the City Council on Monday night.

“Under the best-case scenario, we can be breaking ground in the first quarter of 1994,” said Mike Cutri, a spokesman for the developer, Tokyo-based Shimizu America Corp. “We’ve estimated an 18- to 24-month construction period for the first phase.”

Shimizu America is the U.S. subsidiary of Shimizu Corp. based in Tokyo, a multinational corporation with interests in construction, real estate planning, engineering and design, research and development and transportation. Founded in 1804, the company employs 16,000 worldwide, posted revenue of $15 billion in 1991 and, according to analysts, has strong credit.

The 17-acre project on Main Street, between Owens Drive and Lawson Way, would generate as many as 4,500 permanent jobs, and as many as 2,000 temporary jobs during each phase of construction, officials say.

Phase 1 would include the 32-story office building, retail space, a health club, a live theater and a movie theater, and 64 townhomes. Orange County’s tallest building is now the 21-story Center Tower on Town Center Drive in Costa Mesa.

Phase 2 would include 216 high-rise condominiums, offices, a Marriott-caliber hotel and 1,800 parking spaces. This phase may be completed six years after construction begins or by the year 2000, Cutri said.

The “landmark” project, said City Manager David N. Ream, “will surpass anything developed in the county to date.” City planners have estimated the project, when complete, would generate about $6 million in tax revenue and business fees annually.

Cutri acknowledged that the landowner, Orient Corp. of America in Newport Beach, which is associated with Shimizu, lacks financing. But we are “exploring our options,” he said.

The office vacancy rate in central Orange County in the first quarter of 1993 was 21.5%, tops in the county, according to Grubb & Ellis. Cutri said that Shimizu believes that the vacancy rate could be in the 10% range “or lower” by the time the project opens in 1996.

Office space is leasing at a monthly rate of about $1.50 per square foot.

Cutri predicted that the developers’ credit-worthiness would overcome lenders’ current tightfisted attitude toward commercial loans. He also said that they are looking not just at Japanese lenders, who have pulled out of Orange County, but at domestic funding sources as well.

“There are a number of overseas and local options,” he said.

Nonetheless, the huge project has gained support.

“We have a very high level of confidence that the first phase will go according to schedule and the build-out will be as planned,” Ream said.

He added that company officials remain unconcerned about the present low office occupancy rates because “they feel that by the time the project is on line, the market will be very receptive.

“It’s a cyclical market and they (believe that) they will hit the right cycle,” Ream said.

Development of the north Main Street area was a crucial part of the city’s revitalization plan, developed in 1975, Ream said.

Almost two decades later, plans for the city include a $37-million, three-story Discovery Science Center near the Bowers Museum. Planned by directors of the Discovery Museum, it would include an IMAX theater with a seven-story-high screen.

Other projects include a $100-million federal courthouse near the Civic Center; MacArthur Place, a $1-billion project that includes the same mixed-use concepts as the Concourse, with movie theater, hotel and town houses; and a $98-million, four-story police headquarters and jail.

Times staff writer David Haldane contributed to this story.

* TOUGH SELL: Real estate brokers skeptical Concourse can turn a profit. D6

Santa Ana’s Major Projects

In addition to the Main Street Concourse, several other buildings are under construction or were recently completed.

1. Main Street Concourse: Will include county’s tallest building, a 32-story office tower, townhomes and condominiums, live theater and movie theater. First phase expected to open by 1996; completion by 2000.

2. Midtown renovation: Includes new parking structures and redevelopment of underutilized office buildings. Construction expected to begin in 1994 and continue 20 to 30 years.

3. Bowers Museum expansion: Will include creation of a museum district. Bowers Museum renovation was completed late last year; Discovery Science Center expected to be completed by early 1997.

4. Fiesta Market Place: Created a festival- and Latino-oriented retail center. Completed in 1986.

5. MainPlace: Transformation of Fashion Square into MainPlace/Santa Ana mall. The north wing, including the May Co. and a parking garage, were completed in 1990. Hotel and office tower remain to be built, although time frame is uncertain.

6. Federal courts: Complex of several federal court buildings. First phase completion expected by about 1997, completion by about 2010.

7. Santa Ana police administration building: New city police headquarters. Completion expected about 1996.

8. County criminal courts: New court building addition. Completion expected by about 1997.

Source: Santa Ana downtown development manager Roger Kooi

Researched by JON NALICK for The Times