by Mark Muller
Orange County’s first ground-up creative-office campus looks likely to break ground in mid-2017 under terms of an agreement between the city of Tustin and the developer of the project, which is called Flight.
Tustin’s city council signed off last week on a disposition and development agreement with Flight Venture LLC—a partnership between the Irvine office of Lincoln Property Co. Commercial and Boston-based real estate private equity firm Alcion Ventures—for a nearly 40-acre portion of the Tustin Legacy development.
Flight Venture LLC must pay the city more than $57 million for the land over the course of the project’s construction, under terms of the deal.
That figure could rise to just under $73.3 million, depending on the development group’s timeline for the build-out.
Flight is an 18-building creative-office project that will be built in two phases on a portion of the city’s former Marine base, and will ultimately total about 870,000 square feet.
The first phase will include eight offices and a stand-alone food hall and conference center, and will total nearly 400,000 square feet. The offices will be a mix of build-to-suit and for-lease buildings.
Four of them will run between 73,718 square feet and 110,366 square feet, city filings show. Floor plates for the midrise buildings will be as large as 38,000 square feet, which is larger than what’s seen at traditional office buildings in the area. The other four offices in the first phase of development are described as a “mini-campus” that will be designed for smaller users, and run between 6,500 square feet and 13,250 square feet each.
A three-story parking garage with 1,158 parking spaces will be built to accommodate tenants in the first phase, which will be at the intersection of Barranca Parkway and Armstrong Avenue.
The city expects the first phase of Flight—which previously was called Cornerstone—to hold over 1,700 employees.
The project “will be an important employment center in the community,” said Parke Miller, Lincoln Property executive vice president, in a statement.
The Flight Venture LLC partnership will pay the city just under $26 million for the 17.5 acres that will hold the first phase, according to city documents.
The deal works out to a little under $1.5 million an acre for that portion.
About $6.5 million of initial payment will go toward backbone infrastructure work, including road and utility work, according to city filings.
“The developer’s intention is to close escrow in March 2017” on the first phase, although the partnership has until August to do so, and the venture can extend the closing date until early 2018 if it pays an additional $250,000 in fees, according to city documents.
The developer will have 90 days once escrow closes to begin wholesale construction on the first phase, according to terms of the agreement with the city.
The timing of the second phase of development, and the price that will be paid, haven’t been set.
The Lincoln Property-Alcion venture has “an option, not an obligation” to purchase the second, 21.2-acre portion of the Tustin land, according to city filings.
The option runs 10 years, and the land’s price varies from about $31.4 million in the first year to nearly $47.3 million in the 10th and final year of the option.
The first phase of development requires lease commitments or sales agreements for 232,050 square feet completed, or the developer needs to have contracts for 100,000 square feet of space in the second phase signed before the city will sell the land in that phase.
The city selected the local office of Dallas-based Lincoln Property as its preferred development partner for the project in mid-2015, and has been negotiating with the company since then over the size, scope and other details.
The developer had initially targeted a mid-2016 date for construction to begin at what will be the first office development at the 1,600-acre Tustin Legacy project, which is home to the District shopping center and has seen a large amount of home and apartment development over the past year.
The city previously selected Aliso Viejo-based Shea Properties to build offices and other buildings on the former base, but that plan was abandoned in the last recession.
Rios Clementi Hale Studios is the architecture firm for the project, whose design features will include exterior catwalks, elevators, balconies and porches, which departs from the central elevator-lobby core in most other area office projects.
Mark Motonaga, a partner at the Los Angeles-based firm, has said that hangar-inspired office spaces are meant to pay tribute to “the rich aeronautics culture” of the Tustin site.
The new ground-up office space “is designed for the next generation,” Tustin Mayor John Nielsen said in a statement.