Office Max

Orange County Business Journal, Jan 22-Jan 28, 2007 by Mueller, Mark

Irvine Co. Executives Take Over Amid Office Building, Buying Spree

The first project for Rick Gilchrist and Val Wheeler in their new roles at The Irvine Company is a tall order.

The two are set to oversee one of the company's biggest office projects, a skyscraper planned for downtown San Diego, where the Irvine Co. has invested nearly $1 billion in recent years in a series of building buys.

The company said last week it plans to build a San Diego office tower on land bought from high-rise condominium developer Bosa Development Corp. the company paid a reported $60 million for the land, or about $100 per square foot.

The site has zoning for an office tower of up to 480 feet. The Irvine Co. hasn't disclosed specifics, though il could be 35 stories or so, the largest yet for the Newport Beach-based developer and real estate owner.

To design the tower, (he company said it plans to hire I.M. Pei's Pei Cohb Freed & Partners Architects LLP.

News of the project comes just weeks after changes at the Irvine Co.'s investment properties group, which oversees its office, shopping, apartment and resort operations.

Clarence Barker, the longlime president of the group, is stepping back to become an adviser to Chairman Donald Bren.

Barker is set to remain head of the company's resort operations, which includes the renovation of Pelican Hill Resort at Newport Coast.

Gilchrist is taking Barker's title as president of the investment properties group. The former co-chief executive of Los Angelesbased landlord Maguire Properties Inc., Gilchrist joined the Irvine Co. as president of its office properties division last year.

Wheeler, the company's executive vice president of asset management for office properties, is moving into Gilchrist's old role.

Neither said they expect big changes.

"This is already such a spectacularly wellrun company," Gilchrist said. "My goal here is just to incrementally add value."

Another shared trait: Gilchrist and Wheeler should have a good handle on the competition, especially in the local office market.

Maguire has become one of the largest office landlords in Orange County and all of Southern California.

Wheeler, who joined the Irvine Co. in 2003, earlier was president and chief operating offi-, cer for Chicago-based Equity Office Properties Trust, the biggest office landlord in the country and the county's second-largest landlord after the Irvine Co.

Maguire and Sam Zell's Equity Office "are both financially strong companies," Wheeler said. "If you're going to compete, that's who you want to compete with. You're not forced to do things you don't think are healthy."

Gilchrist, who started out his career as a lawyer, said he keeps in touch with old boss Rob Maguire, who has been rumored to be considering a sale of the real estate investment trust that bears his name.

"I still talk to him regularly, but he's pretty circumspect about what he's up to. Are they in a sales mode? I think they're still trying to figure that out," Gilchrist said.

Gilchrist also has done retail and mixeduse development during his time with Commonwealth Atlantic Properties Inc. in Alexandria, Va.

The Irvine Co.'s apartment division is where he'll need the most time getting up to speed, he said.

"As far as apartments go, I know I'm supposed to pay the rent promptly," he joked. "Fortunately we have a great team already in place there."

Wheeler will be the third head of Irvine Co. office operations in little more than a year, following Gilchrist and William Halford, who took over the top spot at Newport Beach-based developer Bixby Land Co. in April.

His goals as head of the office division, which counts about 400 properties, "are to continue to develop, to run the operating company, and to continue to look strategically for opportunities to buy," Wheeler said.. "The biggest (challenge) is managing the growth."

The company keeps its eyes open for deals-including a possible Maguire sale. But the buying binge of 2006 is unlikely to be repeated any time soon. Wheeler said.

The Irvine Co. spent nearly $1 billion on office towers here and in San Diego last year.

As the company's office division starts initial work on its San Diego skyscraper, it will be putting the finishing touches on three Orange County towers going up in Irvine, including two next to the Irvine Spectrum Center.

No tenants have been named for any of three buildings yet.

"We're working hard. It's a different market than the (downtown) environment of L.A. and the East, where more frequently you pre-lease the building," Gilchrist said. "Here the culture is 'let me kick it, let me see it.'"