Trammell Crow Plans 5-Story Office Complex in Irvine’s Park Place
Reflecting improving conditions in the Orange County market for offices, a major developer has announced plans to construct a five-story office building next year.
Trammell Crow Co. said Wednesday that it expects to begin construction in the third quarter on the 125,000-square-foot structure in its Park Place commercial complex near Jamboree Road and the San Diego Freeway.
It is the third project announced recently after a building lull of more than two years in the local office market.
The Irvine Co. is planning a six-story, 120,000-square-foot office building near the UC Irvine campus. Olen Cos. has said it will go ahead in coming months with a four-story, 80,000-square-foot office building at its Olen Pointe complex in Brea.
The office buildings would be the first in the county since 1994, when the State Compensation Insurance Fund building went up in Santa Ana. The building has been largely occupied by that quasi-government agency.
No new large office buildings for multiple tenants have been built since 1990, according to Alan Baudette, senior vice president of CB Commercial Real Estate Group Inc.
If the Trammell Crow project attracts enough corporate tenants, the developer probably will build an adjacent 15-story office building at Park Place, said William Lane Jr., Trammell Crow managing director. The company next week plans to select an architect from a pool of candidates who submitted designs.
The company will not begin construction on the first building until it leases at least 50,000 square feet, or two full floors of the building, Lane said. Grubb & Ellis Co. has been selected to market the proposed building.
Indeed, signing enough tenants may be the biggest challenge. Many real estate industry observers question whether developers will be able to line up enough companies to pay the higher rents being sought for the proposed buildings.
Although Lane declined to reveal specific rental rates for Trammell Crow’s planned building, Irvine Co.’s proposed $18-million building a few miles away would have asking rates of $2.60 per square foot, far above the $1.64 average rental rate in the area.
Lane said his company’s decision to build was prompted by the increasingly scarce amount of top-quality space in the area.
Top-quality office space in the John Wayne Airport area “is into single-digit vacancy, and there is a long lead time to construct a new building,” he said.
In the third quarter, the average office vacancy rate in that area was 9.17%, according to CB Commercial. The overall vacancy rate for the county was 13%.
As more office space is filled and rents begin to rise, more new projects are likely to be announced next year in the airport area, the Irvine Spectrum and Aliso Viejo, CB Commercial said.
At least one other project is on the horizon. Earlier this year, Texas real estate investor Richard Squires purchased nine acres in Koll Center Irvine North and said he will build twin 20-story office towers, probably within the next year.
