New Construction to Start Next Month at Irvine Spectrum : Real estate: Economists hail revival of commercial building activity as business park plans first expansion in five years.
For the first time in five years, new construction is pending at Irvine Spectrum--a signal that Orange County’s ailing commercial real estate market is on the mend.
Work is scheduled to begin in December on the first phase of an office and industrial development projected to cost $52 million. The first building will accommodate an expansion by Beech Street Corp., a managed-health-care provider already based at the Spectrum, Irvine Co.’s landmark 3,600-acre business park.
Economists on Thursday hailed news of the project as an indication that the Orange County office market is showing signs of new vitality. After demand for commercial office and industrial space dried up in the late 1980s, the Irvine Co., Orange County’s largest landowner, halted construction at the Spectrum. The company put up 90 buildings there from 1984 to 1989 but has constructed nothing there since.
The Spectrum is home to about 2,000 companies and the workplace for more than 33,000 people.
The Irvine Co.’s return to the commercial construction market is “a vote of confidence in the growth of businesses and jobs in Orange County,” said Anil Puri, head of the economics department at Cal State Fullerton. “It’s very encouraging when a large developer like the Irvine Co. believes they can fill new space in 1995.”
In another boost to the local economy, Beech Street also plans to nearly double the number of workers it has at its headquarters to 600 from about 360 now.
Under a $3.7-million, five-year lease, Beech Street will occupy the first of 12 buildings planned for the new development. The company also has options to lease a second building. The new development, to total 525,000 square feet when completed, is being designed as flexible space to accommodate the needs of growing companies.
“We see this as a fundamental change,” said Richard G. Sim, president of the Irvine Co.’s investment properties group. “We think the economy has turned and is moving forward. The Irvine Co. is preparing for two to three years of growth.”
If the demand is there, the entire development could be completed in the next two years, Sim said, adding that buildings will not be erected until companies are found to lease them. O’Donnell Properties Services Inc. will be the construction manager, and LPA Inc. of Irvine will be the designer.
Esmael Adibi, director of the center for economic research at Chapman University in Orange, hailed the Spectrum expansion as the “end of an era” of stagnation and the beginning of a period of growth for the county. He said significant commercial construction by the Irvine Co. signals a “turning point in the local economy.”
Founded in 1951 in Phoenix, Beech Street moved its corporate headquarters to the Spectrum in 1986. Through its Beech Street National Network, the company operates a health care preferred provider network with more than 2,300 hospitals and 150,000 doctors.
Brad Karro, Beech Street’s president, said the health-care firm decided to expand in the Spectrum because of its central location near major freeways and John Wayne Airport, as well as the quality and flexibility of the buildings. The company, which now occupies 46,000 square feet in the Spectrum, will add 100,000 square feet when it moves into its two new buildings.
“With what we expect to happen in health care in the next five years and into the next century, we are going to make sure we are here for the future,” Karro said.
In another development this week, the Irvine Co. began construction on its entertainment center in the Spectrum, which includes what will be one of the largest movie theater complexes in the United States, a 21-screen Edwards Theatre.
