By Mark Mueller
Orange County Business Journal
A high-rise office tower in Newport Center is set to be built for investment manager Pacific Investment Management Co. starting this summer.
Pimco has struck a letter of intent with Newport Beach-based developer and landlord Irvine Company to have a 380,000-square-foot headquarters built for it near the Island Hotel Newport Beach.
The proposed building—at 650 Newport Center Drive, the site of the former Twin Palms restaurant—will go up a few blocks from Pimco’s existing headquarters, which Irvine Co. bought late last year.
Construction on the 20-story tower is expected to finish by mid-2013.
The deal is set to be the largest office development here in several years. The project could bring more than 1,000 construction-related jobs to the area, according to Irvine Co.
It also will be the first office tower to go up in Newport Center in nearly 30 years.
Pimco is set to lease the entire building from Irvine Co., which will be overseeing construction. Terms of the lease weren’t disclosed.
Considering the proposed building’s location at Newport Center—home to Orange County’s priciest office buildings—the lease likely is one of the most expensive ever seen in the area.
The deal is a coup for Irvine Co., the county’s dominant landlord.
Pimco, part of Germany’s Allianz SE, reportedly had been looking at several sites for a building, including in Irvine and Costa Mesa.
Pimco Co-Chief Investment Officer Bill Gross, who is building a home in Newport Harbor’s exclusive Harbor Island, is believed to prefer staying in Newport Beach, according to real estate sources.
Allianz and Pimco officials are said to have recently met with Irvine Co. Chairman Donald Bren in Newport Beach to finalize the deal, according to sources not directly involved in the lease.
The deal marks a big expansion in local space for Pimco, which manages $1.2 trillion in investments for pension funds, insurers, corporations and others.
The company, long known for investing in bonds, is mounting a big push into stocks. Pimco’s first stock fund started last year and now has about $1.8 billion in investments.
Pimco counts about 850 employees in Newport Beach and about 1,500 worldwide.
The company leases about 200,000 square feet at the nearby Pacific Financial Plaza office complex, where its growing operations are said to be relatively cramped.
Its lease there was set to run about another four years.
Allianz leases another 40,000 square feet in the area. Those operations are expected to move to the new tower.
The building should give Pimco some room to grow. The company is expected to use about 90% of the building’s space upon completion.
Designs for the tower still are being finalized, according to Doug Holte, president of Irvine Co.’s office properties division.
The office is expected to include a trading floor, conference center and a television studio for Pimco, whose executives regularly appear on CNBC, Bloomberg Television and others.
The building is being designed by architect Henry Cobb of New York’s Pei Cobb Freed & Partners, the firm behind design of Los Angeles’ U.S. Bank Tower. The new office is set to be environmentally friendly, according to Irvine Co.
“The new building will be appropriate for a company of (Pimco’s) stature,” Holte said.
The deal comes a few months after Irvine Co. acquired Pimco’s existing headquarters. The three-building Pacific Financial Plaza had been one of the few office properties in the area that the landlord didn’t already own.
Pacific Financial Plaza was said to have sold for close to $125 million.
The property is set to get a makeover once Pimco moves to its new building, according to Irvine Co. officials.