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O.C. BUSINESS PLUS

Segerstrom Plans Offices, Hotel Near South Coast

August 03, 2000|DARYL STRICKLAND | TIMES STAFF WRITER

Underscoring the hearty appetite for office space and the flourishing economy, a pair of major Orange County developers are proposing new office and hotel buildings around the South Coast Plaza area.

C.J. Segerstrom & Sons, one of the county's largest landholders and creator of the shopping district South Coast Plaza in Costa Mesa, said it is planning an office building near Bristol Street and Sunflower Avenue with 255,000 square feet of space. It is Segerstrom's first new tower in nearly a decade.

The company also is planning a 186-room luxury hotel on Bristol Street, across from South Coast Plaza, where Scott's Seafood now stands. A new version of the restaurant has been proposed inside the hotel, which will cater to wealthy travelers.

Meanwhile, the CommonWealth Partners, which owns nearby Two Town Center, a major office and retail development, is proposing to build two office towers in the South Coast Plaza district, totaling about 430,000 square feet.

For the Record
Los Angeles Times Saturday August 5, 2000 Orange County Edition Business Part C Page 3 Financial Desk 2 inches; 49 words Type of Material: Correction
Costa Mesa Projects--The Segerstrom family has donated land in Costa Mesa for a new symphony hall and South Coast Repertory expansion. The family also is selling the land near South Coast Drive and Harbor Boulevard to Ikea, which plans to build a store. A story Thursday incorrectly described the Segerstrom family's involvement in both projects.

The projects by Segerstrom and CommonWealth are in the early stages of planning and require city approval. The developments will be discussed at a preliminary meeting scheduled for Monday by the Costa Mesa Planning Commission.

Officials at Segerstrom and CommonWealth said they did not have firm dates in mind, nor any tenants lined up. "We see this as a long-term project," said Brett Munger, CommonWealth's chief investment officer.

Segerstrom spokesman Paul Freeman said the new hotel could be up to 14 stories and would compete with some of the nicest hotels in Southern California. "We want to fill that void," he said.

If built, the offices and hotel would significantly expand Costa Mesa's business district and raise the city's corporate image. The proposed projects would increase by roughly one-third the total amount of office and hotel space in the South Coast Plaza vicinity, said Michael Robinson, Costa Mesa's planning and redevelopment manager.

The proposals come at a time when the overall office vacancy rate in Orange County has dipped to an all-time low--8.2% in the second quarter, according to Grubb & Ellis Inc. in Newport Beach.

Strong job growth, coupled with record low unemployment, has caused rapid expansion among companies. Buildings that sat nearly empty a decade ago are filling with tenants, and new high-rises are again emerging. Lease rates for premium offices have surged to a record $2.10 per square foot.

George Economos, a senior vice president at NAI Capital Commercial Real Estate in Newport Beach, said the new South Coast Plaza area projects could create a glut of space if the buildings come on line at once. But he added that high-rises have been quick to fill recently; several new office buildings opened during the second quarter are already occupied, he said.

For Segerstrom, the new hotel and office building is only part of what's planned for Costa Mesa. Segerstrom previously said that it plans to expand South Coast Repertory, build a new symphony hall and possibly add a new art museum amid the cluster of cultural and office buildings east of the shopping district.

Moreover, Segerstrom also is working on building a new Ikea store, along with nearly 1 million square feet of offices, homes and industrial property near South Coast Drive and Harbor Boulevard. Those plans, though, have been scaled back by nearly 50% of what was initially proposed, Freeman said.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Grand Design

C.J. Segerstrom & Sons, developer of South Coast Plaza, is planning to built three high-rise office buildings and a hotel in the Performing Arts Center area, according to city planning documents.

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