October 1, 2007

Corona Growing its Corporate Image with Office Development

Lower Lease Rates, High Tenant Demand To Attract Orange County Companies, Residents

By Jessica C. Lee

Once known as the “lemon capital of the world,” Corona is undergoing a makeover.

The Riverside County hub is rapidly developing office towers, hotels and retail centers to strengthen its identity as an economic center.

Corona looked to fast-growing Orange County cities such as Irvine as inspiration when it grew its housing and business communities in the 1990s, according to Darrell Talbert, Corona’s deputy economic development director.

Now more than a decade later, Corona believes it’s all grown up and is counting on a surge in office and other commercial construction to make it competitive with OC.

“Before the Inland Empire hit its growth peak it was always ‘Corona who’ or ‘Corona where.’ Over the years, we’ve made a real effort to attract businesses and homebuilders to the area and now we’re starting to see everything blossom,” Talbert said.

Located in the most western part of Riverside County, Corona has long stood as the gateway to OC with a good chunk of its residents commuting to jobs in Irvine, Costa Mesa, Santa Ana and other cities.

Now the city wants to close that gateway and lure more professional service businesses and retailers to the area to boost its revenues and keep residents from crossing the county line to work and play, Talbert said.

More professional service jobs in the area should help alleviate traffic on Corona’s streets and the Riverside (91) Freeway and Interstate 15, which have become increasingly congested over the years as more people in Corona commute to OC, Talbert said.

“With all of the office space under construction, our job numbers will increase and will help take people off the freeways,” Talbert said. “This is an aggressive approach to mitigate that pain.”

Corona has 1.4 million square feet of office space in the planning stages or under construction. Noteworthy projects include the 472,000-square-foot Lakeshore Plaza at Dos Lagos developed by Corona’s SE Corp.

Voit Commercial Brokerage LP’s Irvine office is overseeing leasing in the 17-acre project.

The buildings began construction in the first quarter and should be completed in December.

So far it has already drummed up interest from large banks, law firms and other professional service companies looking to occupy space for Inland Empire branches, according to Voit’s John Harty.

“We’ve had a lot of interest,” he said. “There are other class A office buildings that already exist in Corona but this will definitely be a leader because of its location.”

Corona’s growth spurt in office development reflects its maturing business market, which has shifted from being predominantly industrial to incorporating professional service businesses, Harty said.

“What we’re seeing with Corona is very typical of a maturing market,” he said.

OC developers have noticed this growth trend and some have already tapped into it.

They include San Juan Capistrano-based Mammoth Equities LLC and Werdin-Ewing LLC, a partnership between Werdin Corp. and Carter Ewing of Howser Ewing Cos., both of Newport Beach, which are building in the area.

Mammoth Equities is building an $11 million, three-story, 58,000-square-foot building near the 91 freeway off Green River Road. The company is targeting small businesses and expects to open by the end of the year.

Werdin-Ewing is spending $35 million on a 12-building office development called the Corona Corporate Centre. The complex will consist of one- and two-story buildings ranging from 1,500 square feet to 22,600 square feet and should be completed by the fourth quarter.

Thom Sergeant, project manager for Mammoth Equities’ office building, expects the development to attract businesses from Orange and Riverside counties.

“Corona is maturing as far as urban development is concerned,” Sergeant said.

Corona’s affordable lease rates could help the city attract more professional service businesses from Orange and Los Angeles counties, said Chris Migliori, executive vice president for Daum Commercial Real Estate Services’ Anaheim office.

“Corona’s business community has been growing for the past 15 years and the reason for that growth is simple—it’s more affordable,” Migliori said.

Corona’s average rent for office space is $2.58 per square foot, according to the city. OC’s overall average asking lease rate increased 7 cents from the first quarter to $2.73 per square foot.

Last year, Corona’s business expansion grew 20% and in coming years the city plans to add more retail, office and industrial space, according to Judi Staats, Corona’s senior economic development project manager.

Staats believes Corona’s low office vacancy, about 2.7%, should spur development.

To further encourage developers to build more commercial and office projects, the city is willing to annex land along the southern part of the Interstate 15 corridor—although it’s too early to know whether this will actually happen, she said.

“Corona isn’t maxed out on space but we need to think ahead,” she said.

Attracting universities to the area is another idea the city is considering, according to Staats and Talbert.

University of California, Riverside, California State University Fullerton and California State University San Bernardino are said to have expressed interest in opening campuses in the area but deals remain undisclosed, according to Staats and Talbert.