What's Happening South of the Great Park?
Observers of the Orange County real estate scene are waiting to see what will be proposed for development on the County of Orange’s 100-acre strip of land just south of the Great Park in Irvine. The county has awarded a 75-year lease of the land to Lowe Enterprises, the Los Angeles-headquartered real estate development firm.
Lowe will develop and manage a complex – most onlookers believe it will be commercial – and the county estimates that it will earn $3.7 billion during the course of the lease.
Master planning and development of the site is scheduled for three phases, with the first phase – planning and approvals – expected to take up to two years. As part of the agreement, the county will expand Marine Way from Sand Canyon Road into the site from the current two lanes to four lanes.
A message has been issued for Orange County companies which might need new or additional office space during the next several years: “Now is the time to make your move.”
That is the word from Cresa, the international corporate advisory firm which represents office tenants. Cresa points out that with a combination of relatively steady employment growth during 2013, projected to increase during at least the next three years, and minimal new office building construction, demand for office space and therefore lease rates will escalate.
The firm points out that while actual lease rates have been 5% to 15% below asking rates during the past several years, those reductions have ended and concessions – such as parking and tenant improvements – have shrunk. Cresa believes that lease rates have hit bottom and are on their way up.
Once vacancy rates have been further reduced, new office construction will begin, but Cresa points out that once construction begins, there is a 12-to-24-month delay until a building is completed.
As a result, Cresa forecasts a 20% increase in rates over the next three years.