The vacant Orange County Register property in Santa Ana is almost a ghost town these days. Printing presses stand idle, desks are empty and the wind stirs empty parking lots and weed-strewn fields.
But when developer Michael Harrah, the property’s new owner, casts his gaze across the 20-acre newspaper site, he sees something radically different.
Glittering glass towers sprout from vacant land. A corporate campus inhabits refurbished offices. Pedestrians and skateboarders crisscross walkways heading to apartments, shops and restaurants or stroll across a pedestrian bridge to catch a train or streetcar at the nearby rail depot.
It’s perhaps the most ambitious plan to date for Harrah, the 6-foot-6, bewhiskered construction worker-turned-real estate tycoon. It features 2.35 million square feet of office, apartments, hotel and retail, at a cost of just over $1 billion. It includes the tallest buildings in Orange County, matching in height his long planned 493-foot-tall office tower in downtown Santa Ana, dubbed One Broadway Plaza.
“This is literally the most valuable land in Orange County,” Harrah said during a recent visit to the former Register property at 625 Grand Ave., dubbed 625IVE in artist’s renderings. “There’s no other place in Orange County where there’s 20 acres, where you can go up 500 feet and have density. If you want 500,000 square feet (of office), we’re the only game in town.”
Harrah, 66, acquired a portion of the Register property in 2014 and the rest in 2016, paying more $60 million, according to media reports. Harrah estimates the purchase price and his costs at $76 million, including equipment, printing presses and furnishings.
The Register moved its operations in April to a leased building in Anaheim just south of Angel Stadium, setting the stage for the Santa Ana site’s next chapter.
New towers
Although still in the planning stages, conceptual images of 625IVE show at least eight new structures joining four existing buildings. The new buildings include three high-rises measuring 260-493 feet tall.
In all, the plan calls for 1.2 million square feet of apartments and hotel space, nearly 1.1 million square feet of office and 44,000 square feet of retail.
The existing printing plant would be reconfigured into a combination of office and retail.
Harrah sees little risk.
“Demand for commercial space is off the chart,” he said.
Some agents agree office construction hasn’t been able to keep up with demand.
Even though Orange County has about 2.4 million to 2.6 million square feet of office space under construction — mostly in Irvine — that’s about half the pre-recession levels a decade ago, reports by commercial brokerages CBRE and JLL show.
Some observers are skeptical, however, questioning the project’s location in sleepy, gritty Santa Ana — far from Orange County’s priciest and most desirable business centers — the Irvine Spectrum, Fashion Island and the John Wayne Airport airport area.
Monthly rents averaged $1.49 per square foot in downtown Santa Ana last spring, the lowest office rents in the county, JLL reported. Office rents averaged $2.71 per square foot countywide, $3.05 at the Spectrum and $4 at Fashion Island.
Commercial agent Curtis Ellmore, a JLL senior vice president in Irvine specializing in office tenants, believes the residential component has the most promise, given that most apartment developers appear to be meeting or surpassing their planned lease-up periods.
But the office component, he said, “is TBD.” To be determined.
“We’re not seeing a trend of (office) tenants moving to downtown Santa Ana,” Ellmore said. “They’re moving away from there.”
Harrah also has yet to make good on his 18-year quest to build the 37-story One Broadway Plaza. The project was unveiled in 1999, won voter approval in 2005 but has yet to progress beyond site work.
Although Harrah has permits to install test pilings, according to city planners, he has yet to seek building permits for the structure itself.
Harrah said, nonetheless, the $450 million construction project is underway and has at least $325 million in financing. Lenders have lifted their requirement that Harrah lease at least half the space in the tower before construction can begin — a requirement the city also lifted seven years ago.
Harrah predicted it will take 2½ to three years to complete One Broadway.
He’s made such predictions before.
In 2005, he said the building would be finished by the start of 2008. The Great Recession interceded, but as the downturn was lifting in December 2012, he projected a start date by the summer of 2013. A year later, he said construction would begin by the summer of 2014, with completion in 2017.
Formula for success
JLL’s Ellmore believes prospects are better for the former Register site.
“Based on the location and its proximity to the 5, I would give it a higher probability for success than One Broadway Plaza,” he said.
Several market observers agree that Harrah’s combination of apartments and large blocks of office space, if priced right, is a better formula for success.
“I would say Santa Ana is a city that is experiencing growth,” said Jeff Moore, a senior managing director for CBRE in Orange County. “Downtown Santa Ana retail is good. It’s becoming more urban. There’s some good things happening in Santa Ana that could make that work.”
Real estate consultant Mark Boud, president of San Clemente-based Real Estate Economics, notes that high office demand and access to commuter routes give Harrah’s plan a boost.
“The site is large enough to create its own identity,” Boud said.
Residents in the adjoining Saddleback View neighborhood east of the property say they’re eager to see the site redeveloped. They’re hoping it will spur development throughout the area, including the widening of Grand Avenue and replacing a jumble of dilapidated rentals west of the site.
“It would be a great improvement to that area,” said Desi Reyes, a long-time resident active in the Saddleback View Neighborhood Association. “I think it would improve home values in the area.”
The main concern is the density, he added, saying some neighbors might object to the high-rises close to their properties.
Back at the former Register site on a recent Friday, Harrah reflected on the property’s possibilities. Dressed in a suit jacket, blue jeans and ostrich-skin cowboy boots, he maintained the project will be a boon, not just to his One Broadway tower, but for redevelopment throughout downtown Santa Ana.
While freeway accessibility is an asset, “even more than the freeway is the train and the light rail.”
The train station — a five-minute walk away — “is literally in the back door,” he said, connecting commuters to Amtrak, Metrolink and eventually a sleek electric streetcar line through the city, perhaps as soon as 2020.
Employers can draw a workforce from San Diego to Santa Barbara and the Inland Empire, he said, while workers and residents can hop on the train for a concert at the Honda Center.
“These two 37-story buildings and One Broadway will change everything,” Harrah said. “This is the poster child of, if you build it, they will come.”
