REAL ESTATE NEWS

Southern California’s largest office landlord has reported robust leasing activity for its Orange County portfolio in the second half of 2024.

The Irvine Company has leased more than 1.8M SF at its office campuses in Orange County in H2 2024, including new leases and renewals, to tenants including major financial institutions, healthcare and life science companies, tech firms and insurance providers.

The bevy of leases inked by Irvine Co. since July 1 in OC includes an expansion by JPMorgan Chase at the Jamboree Center in Irvine increasing its footprint by 72K SF to 173K SF; a 116K SF deal with Becton, Dickinson, at Spectrum Terrace, a 70-acre office campus in Irvine; and Bank of America’s 105K SF lease at Newport Center in Newport Beach.

Roger DeWames, president of Irvine Company Office Properties, said in a statement that the robust activity is being driven by the flight to quality in OC’s office market.

“The leasing momentum we’re experiencing across our Orange County portfolio demonstrates the strong demand for high-quality workplaces backed by a landlord able to meet the evolving needs of the market,” DeWames said.

Irvine Company, which has been strategically investing in workplace amenities in OC, announced that will spend $24M to upgrade four of its Orange County office campuses.

The firm has earmarked $17M for the Jamboree Center, which will add a new amenities hub including a two-story KINETIC fitness center, among other improvements. The Pacific Arts Plaza in Costa Mesa will get a new meeting and events venue with a connected outdoor work space.

The office buildings at 660 and 680 Newport Center Drive will be adding an enhanced outdoor workspace with a “media wall,” as well as a modernized lobby and landscaping. Irvine Business Center also is enhancing outdoor workspaces and adding a fitness center.

While the flight to quality by large well-capitalized corporations continues to dive demand for premium Class A office spaces in Orange County, OC recorded its seventh straight quarter of negative net absorption in the third quarter, according to CBRE’s market report.

OC added another 220K SF of negative net absorption in Q3, bring the year-to-date total at the end of the third quarter to minus 863K SF. The overall office vacancy rate in Orange County in Q3 was 14.7%, CBRE said.

While Newport Beach-based Irvine Company is busy inking deals in OC, it also has been offloading office properties in San Diego’s struggling downtown office sector.

In September, Irvine Co. sold the 34-story Symphony Towers, a downtown landmark that is home to the San Diego Symphony, to Formosa, Ltd. for $45.7M, or about $84 per SF, nearly 70% less than the $134M Irvine paid for the property in 2003.

In October, Irvine Co. listed for sale two office towers near Horton Plaza at 101 W. Broadway and 225 Broadway. Eastdil Secured is marketing the Class A buildings, describing them as “two of downtown San Diego’s most iconic office towers along Broadway,” the San Diego Union-Tribune reported.

Irvine Co. is the largest office landlord in San Diego, with a portfolio encompassing a total or more than 8M SF, according to CoStar data.

The sale of the San Diego office towers is part of a strategic shift for Irvine, the company’s VP of communications, Ryan Lilyengren, said in a statement.

“We are conducting a long-term strategic review that we anticipate will include the sale of certain downtown San Diego office properties and reinvestment in other,” Lilyengren said.

The statement indicated that Irvine Company will be a major player in a master-planned development in the University City Neighborhood around UC San Diego, where an approved community plan envisions 30,000 additional residential units.

“Guided by the city’s vision and our experience creating world-class mixed-use district, we are beginning our master planning to create quality housing connected to office campuses, retail, transit and open spaces,” Lilyengren said.

The Downtown submarket in San Diego had an office vacancy rate of 25% and a total availability rate of nearly 30% in Q3 2024, according to CBRE’s latest market report.

Source: GlobeSt/ALM