Fluor's Move Will Leave a Big Hole to Fill at Irvine's Park Place Complex

By DARYL STRICKLAND

June 22, 1999 12 AM PT

TIMES STAFF WRITER

The postmodern complex that dominates the horizon along the San Diego Freeway in Irvine officially is known as Park Place Office Campus. But for the last 23 years, the project--an Orange County landmark--has been home to its first Fortune 500 company, Fluor Corp.

The rectangular glass buildings and tower have become so well-linked with the nation’s largest engineering and construction firm that many think of the site simply as “the Fluor building.”

But after more than two decades as Park Place’s most visible tenant, Fluor is leaving at month’s end for a campus-style complex in nearby Aliso Viejo. Left behind will be a crater-sized hole in the heart of Orange County, about 600,000 square feet of space. It is the single-largest vacancy ever to hit the market here.

Faced with the equivalent of leasing a 24-story tower--which would be taller than any building in Orange County--Janine Padia, head of Park Place’s leasing for Winthrop Management, is confronted with a massive task.

But the opening may be coming at an opportune time. The region’s vigorous economy has created the strongest demand for office space in years. At the end of 1998, the county’s vacancy rate was 8.4, the lowest since Grubb & Ellis Inc. began tracking the office market in 1984.

“If we kept it leased when things were so bad, hopefully we can keep it leased when times are good,” said Padia, whose employer manages and partly owns the sprawling complex.

Completed in 1981, Park Place is spread over more than 100 acres. It consists of 1.8 million square feet, including six four-story buildings, a 10-story tower, and single-story offices, with a concourse that connects the structures.

As in many campus projects, Park Place features attractive gardens and fountains. But it also contains the amenities found in high-rises, such as a dry cleaners, florist and travel agency.

Its hallways gently curve like rivers, flowing into a 1,500-seat cafeteria, a full-service restaurant and a 120-seat auditorium. Across the parking lot are a dozen eateries and a 10-screen movie theater.

The building’s futuristic look--in particular, a mushroom-shaped steel and glass tower and Tinkertoy-shaped structures that house the complexes’ mammoth heating and air conditioning system--has caught the eye of motorists and filmmakers alike. The main office complex has been a backdrop to films such as “Demolition Man” and “Defending Your Life.”

But the complex’s greatest strength--its size--also is its greatest drawback. In the low-rise buildings, each floor is almost an acre wide, nearly as large as a football field. They were designed to accommodate large office users such as call centers, insurance carriers and health-care providers, which require row after row of cubicles.

As a result, the site appeals to relatively few. The floors can be divided into 20,000-square-foot units, nearly the same as a typical high rise, but corner offices cannot be created with the prestige of vertical structures.

Moreover, a company’s presence can be overwhelmed by the project’s sheer size. Some sides of the buildings draw less sunlight than do newer competitors. And getting in and out of the nearly 6,000 parking spaces, especially around lunchtime, can be time-consuming.

But brokers consider the property a relative bargain at a monthly rate of $1.85 per square foot, which includes utilities and other fees. That’s at least 40% less than the average price for similarly priced properties in Orange County’s airport area, according to a Grubb & Ellis first-quarter market report. Some brokers said the Fluor space will help slow down rental appreciation in the area.

“They’ll appeal to the price-sensitive user rather than the image-sensitive user,” said Al Masters, a vice president at CB Richard Ellis Inc. in Newport Beach.

Located in the shadow of John Wayne Airport, Park Place is surrounded by a building boom.

More than 2.5 million square feet of new office space is under construction in Orange County--the equivalent of more than seven buildings the size of Taco Bell’s headquarters in Irvine--and nearly 7 million more square feet is in the planning stages, according to Grubb & Ellis. Two new office towers, the first in almost a decade, are expected to be completed this year near the airport.

Half of the county’s office space is in the airport area--about 26.3 million square feet overall--enough to dwarf downtown Seattle.

The current market is driven by corporate expansion within Orange County, and to some extent by companies from elsewhere moving into the county, brokers say. That contrasts with the go-go 1980s, when projects were developed into monuments to match developers’ egos largely because financing was available, rather than a real need for space. At the peak, brokers were trying to fill 3 million square feet as new high-rises were rapidly built.

But as the defense industry sank, and companies moved out of state during the recession, vacancy rates soared above 20%. As the region became more entrepreneurial, especially in the technology sector, and its economy more diverse, however, the business climate improved. By 1998, vacancy rates had dwindled into single digits.

Although some large tenants have vacated Orange County this year, a string of large leases has helped offset that. Fireman’s Fund filled 400,000 square feet in Irvine. Ditech.com is taking 110,000 square feet in Costa Mesa. PricewaterhouseCoopers is expected to occupy 70,000 square feet in Irvine. And Ernst & Young reportedly has settled on 140,000 square feet in an Irvine tower yet to be constructed, brokers said.

Padia, like other leasing executives, can recall when leads from prospective tenants looking to move or expand in Orange County were weeks, sometimes months apart. But companies, searching for new locations, have been more active since the year began.

Several prized tenants currently scouring the market include Capital Group, a financial services giant that is searching for 400,000 square feet. Food manufacturer Hunt-Wesson is making inquiries on 250,000 square feet. And Seattle insurance giant Safeco Corp. is looking for 200,000 square feet, brokers said.

“Based on their location, and their amenities, [Park Place] will always be a consideration for a large tenant,” said broker Barry Gail, a principal at Cushman & Wakefield.

Though no one underestimates the task of filling such an enormous void, Padia said that Park Place, without Fluor as an anchor, will be only 67% occupied.

But she said several deals are in the works. Winthrop is only a signature away from signing a tenant to occupy 100,000 square feet and is negotiating with current tenants, who could expand to occupy another 25,000 square feet.

Fluor once leased 900,000 square feet in Park Place. As the company trimmed its work force and office space needs over the last two years, Padia filled 300,000 square feet of former Fluor space by signing several firms, including IT Corp., Caltrans and First American Title Co..

But with the largest block about to hit the market, Padia has stepped up efforts to lease the void.

New interior paint and carpet are planned. Brokers have been sent fliers to keep them mindful of the property, and humorous ads have been placed in newspapers and magazines (“Park Place announces the biggest space program since NASA”).

In addition, an 800-space parking garage is due to open next year. And a new signage program to raise the visibility of tenants, and to help visitors find their way through the maze of buildings, will be underway soon.

The moves, Padia hopes, will remind people that there’s more to Park Place than simply Fluor’s headquarters.

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Park Place Office Campus

Here’s a look at the Park Place complex in Irvine, which consists of six atrium-style buildings, a 10-story tower, and a single level concourse. The complex has been the corporate headquarters for Fluor Corp., but the construction and engineering giant is leaving at the end of this month.

Address: 3345 Michelson Ave., Irvine

Built: 1976 to 1981

Available space: 600,000 square feet

Cost: $62 million

Owner: Winthrop Management and Jamboree Center

Architect: Welton Becket

Amenities: 18-hole putting green, fitness center, barbershop, 1,500-seat restaurant and a full-service restaurant with a dozen private rooms.

Film credits: “Demolition Man,” 1993; “Defending Your Life,” 1991.

Prospective tenants: Insurance carriers, engineering or health care firms.

Fluor’s Floors

Fluor Corp.’s presence in the 1.8-million-square-foot office complex has dropped to less than half its highest point. Fluor space, in square feet:

1985: 1.4 million (78%)