There’s been lots of talk about empty high-rise office towers and their potential as sites for extra housing.
Maybe those low-slung office parks should be in those conversations, too.
Consider that real estate giant Irvine Co. already has the city of Irvine’s OK to start planning apartments at three sites of undeveloped land that once was targeted for low-rise commercial use. And now the company is seeking approval to do the same on a fourth parcel.
It makes some sense. My trusty spreadsheet tells me Orange County has a people problem. Its population has fallen in each of the past five years, a total loss of 51,000 residents. Meanwhile, the number of Orange County residents with jobs is off 23,000.
Yet, Orange County employers have added 73,000 positions in the same period. Who (and where) are these workers?
Some of this oddity can be tied to remote work – an Orange County boss with employees elsewhere. Other members of this group are Orange Countians with two jobs.
But most of this gap comes from bosses “importing” workers – commuters who jam local freeways and streets every business day.
More housing could do more than increase affordability. It could lower traffic, too, if fewer folks have long treks to and from work.
Business needs
Local business leaders have complained for years about challenges in hiring because Orange County housing is so expensive.
And these same executives are now pushing to get people back into offices. This quest would get a boost if more employees had shorter commutes.
So Irvine Co. sees apartments as another way to serve local corporations. Housing could be as critical as cubicles, meeting rooms, or factory and storage spaces.
“Our Class-A office campuses continue to attract top employers. Creating homes near these jobs is important to retaining Irvine’s top talent locally and preserving the city’s economic strength,” says Jeff Davis, an Irvine Co. senior vice president.
Look at Irvine Co.’s recent decision to plan for as many as 1,200 rentals on the last empty parcel at UCI Research Park at UC Irvine. The site is zoned for an office building.
This follows the company getting approval to start work on rental housing at three other Irvine sites with zoning to serve corporate needs. The projects include 1,459 rentals on 29 vacant acres near Discovery and Laguna Canyon and 896 units on 10 vacant acres near Gateway and Pacifica. Another 4 acres on Technology Drive near the 133 toll road would be donated to the city for 320 affordable housing units built by others.
Yes, these are rough times for many commercial property owners as the work-from-home pivot slashed office demand. Yet Irvine Co. officials insist challenging market dynamics aren’t the motivation for this added housing.
Irvine Co. says its Orange County office portfolio is 91% leased at a time when the overall market is only 80% full. Company officials also point to the proposed apartment site at UCI Research Park, with offices for medical technology firms. It has filled 96% of its 2.2 million square feet after leasing 300,000 square feet to new tenants in 2023.
“From a master planning perspective, UCI Research Park is an ideal location for new housing – just steps from thousands of high-tech jobs and a top-ranked research university,” Davis says.
Mixed views
Most property owners opt to specialize in one real estate niche – apartments, offices, malls, warehouses, etc. These investors tend to have a narrow view of the world and rarely make dramatic switches in properties they control.
However, Irvine Co.’s broad portfolio of properties – offices, apartments, industrial buildings and retail that’s mostly in Southern California – allows for different thinking. One result is an ability to switch gears, such as swapping commercial and residential uses for land the company owns.
Or ponder constructing new offices, something largely halted by most developers. Irvine Co. hasn’t stopped.
Last year, the developer completed Spectrum Terrace, eight, four-story buildings near the 405 in Irvine. The 1.1 million square feet of swanky office space – with amenities like a pool, gym and fancy eateries – hosts the likes of Amazon and Apple.
Irvine Co. is also halfway complete on Innovation Office Park – another 1 million-square-foot campus with hipper, two-story buildings off the 5. It’s become a home for numerous gaming companies such as Sega and Frost Giant.
Still, a seemingly permanent push away from the traditional workplace is dramatically retooling demand for office space.
Elsewhere in the region, we’ve seen existing business park structures torn down for other corporate uses – primarily offices becoming warehouses or manufacturing space. We’re watching old malls become mixed-use projects blending housing, shopping, hotels and/or offices.
And now we see raw land in Irvine, once planned for corporate use, turning toward residences.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
