DEVELOPMENT: IRVINE CO.’S LATEST: LUXE OFFICES, HIGHER RENTS
By Katie Murar
Irvine Co. is bringing some Silicon Valley chic to its latest office park in the Irvine Spectrum.
Orange County’s dominant real estate firm is prepping to open the first phase of Spectrum Terrace, a nine-building office park along the San Diego (405) Freeway, next to Laguna Canyon Road.
It’s the highest-profile, and likely most expensive, office project for Newport Beach-based Irvine Co.—far and away Orange County’s most active office developer the past few years—since it opened a pair of 21-story towers next to its Spectrum Center mall in 2016 and 2017.
The first phase of Spectrum Terrace—about a mile from the mall—runs close to 350,000 square feet. It includes a trio of offices running three and four stories, plus a pair of smaller amenity buildings.
Future phases of construction will include six more mid-rise offices and other buildings, and will boost the size of the campus past 1 million square feet.
The 73-acre site is about the same size as Fashion Island in Newport Beach, which Irvine Co. also owns.
Company officials with the developer haven’t announced any leases to date, but express confidence that the first phase could be nearly 50% spoken for by the time construction wraps up for the three buildings in the next month or so.
Monthly rents are likely to run in the $3.50 per square foot range, triple net, roughly 20% higher than the average for the Spectrum office market, brokers told the Business Journal.
Occupancy rates for the Spectrum’s existing base of nearly 13 million square feet of office space currently stands around 93%, according to brokerage data.
The higher-than-typical rents reflect the project’s quality, which is already standing out to prospective tenants, according to Steve Case, executive vice president of Irvine Co.’s office properties division.
Employers that choose to sign on “are the ones that care about attracting and retaining employees,” Case said.
From investing a “significant premium” to buy the best glass available for the floor-to-ceiling windows in each office building, to planting over 2,000 trees and a bevy of amenities, Irvine Co. is touting the project as its best mid-rise office campus to date—a bold claim for a company with more than 500 offices to its name.
“There’s nothing like this project in Orange County,” Case said during a recent tour.
Irvine Co. officials said they looked to Silicon Valley—where it also has a considerable office development pipeline—for a good portion of inspiration for Spectrum Terrace.
Company execs visited Silicon Valley tech campuses of the likes of Apple and Facebook for design and amenity ideas for the site, which had once been a central part of Irvine’s pitch to Amazon as a potential site for a portion of the e-commerce giant’s second headquarters campus.
They came away with ideas that aimed to lure new tenants, and impress existing ones, with amenities taking a front seat.
The first phase includes a 6,000-square- foot Kinetic fitness facility with indoor and outdoor fitness classes and Peloton bikes, as well as a 5,600-square-foot Terrace Kitchen.
“Food and fitness are the two most important things for employees,” Case said.
Terrace Kitchen is akin to a food hall, with one food operator servicing several stations, including a coffee bar, a grab-and-go counter and wine and craft beer taps.
A planned 5,800-square-foot conference and event center is still in the works.
“Employees will have everything they need. It’s what [some tech companies] call a friction-free day,” Case said.
The project was built on undeveloped land between the Quail Hill and Laguna Altura residential communities; for a short time, it was the site of the Cavalia horse show, and prior to that the land was pitched to chipmaker Broadcom as a potential location for a new office campus.
Though the office complex was once envisioned to potentially only have one user, several companies are now expected to take up spaces that range from a half floor to entire buildings, according to Tom Greubel, vice president of leasing at Irvine Co.’s office properties division.
Spectrum Terrace marks the latest new office development in the Spectrum area by Irvine Co., which has built or is in the process of building several million square feet over the past five or so years.
The Business Journal estimates the cost of that development to be nearly $1 billion.
Irvine Co. ranks No. 1 on this week’s list of Orange County’s largest developers, with 1.2 million square feet of space completed in the past year (see list, page 31). It has ranked in the top three spots for each of the past five years.
In addition to the two 21-story towers along Spectrum Center Drive, Irvine Co. has built a series of mid-rise buildings at its Discovery Park and Sand Canyon Business Center office parks.
Down the street, another office project is about to start.
The Business Journal last month was first to report on Irvine Co. plans to break ground later this year on a 550,000-square-foot low-rise office project called Innovation Park.
A collection of 15 smaller-sized buildings will be built on a 35-acre parcel of land near the intersection of the Santa Ana (5) Freeway and Sand Canyon Avenue. The land was once home to Traveland USA but has been vacant for several years.
Innovation Park is roughly the same size as Trammel Crow Co.’s two-building The Boardwalk development in Irvine, the largest office project built near John Wayne Airport the past few years.
“Our aim is to meet Irvine’s robust job growth, especially in the tech and innovation sector,” Case previously told the Business Journal.
Originally published on 6/10/2019, Orange County Business Journal