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Home Depot in Negotiations for Parker Site

Home Depot Inc. is in escrow to acquire the coveted 42-acre Parker Aerospace parcel in Irvine, with initial plans to build an Expo Design Center on part of the site and sell the rest to an unnamed third party for use as a business park or technology company incubator, according to sources familiar with the transaction.

Atlanta-based Home Depot, which declined to comment for this story, is scheduled to close escrow on the property near Jamboree Road and the San Diego (I-405) Freeway in September, a source close to the deal said. Sources declined to identify a buyer for an incubator or business park but described it as a technology-related investor.

Michael Hiemstra, vice president of finance of Cleveland-based Parker Hannifin Corp. and the company’s point man for negotiations, acknowledged a deal is in place but declined to name Home Depot as the potential buyer.

“We signed a confidentiality agreement with the buyer, and there’s no disclosure until the transaction is completed,” he said.

One source said Home Depot is paying roughly $32 per square foot, or $55 million, for the site. Another source more familiar with the talks said the price was lower, though he declined to specify a figure.

Either way, the final figures stand to be substantially less than what technology incubator eDevelopments.com had agreed to earlier this year, which a source placed at $65 million.

Second Time Around

Home Depot was a bidder on the site when it was first put up for sale, eventually losing out to eDevelopments.com, a company headed by Buy.com Inc. founder Scott Blum that is envisioned as an incubator and application service provider.

EDevelopments.com had a tentative deal in place to acquire the property, but that deal fell apart over the timing of when Parker Hannifin would turn over control of some of the site.

Parker Hannifin officials had insisted that Parker Aerospace, the firm’s division currently occupying the site, be allowed to remain in some the buildings for several more years, a prospect that hampered eDevelopments.com’s vision for the site, sources said.

In May, eDevelopments signed a five-year lease at The Summit Office Campus in Aliso Viejo.

Restrictions Lower Price

Home Depot officials apparently are ready to live with some of the conditions that come with acquiring the property , mainly the continued presence of Parker Aerospace on a portion of the site for a while longer.

Real estate observers pointed out when the eDevelopments.com deal fell apart that Parker Hannifin would still have a long list of potential buyers. But the company would have to settle for a lower price because of the restrictions it was putting on any deal.

Preliminary plans call for Home Depot to build a 105,000-square-foot Expo Design Center on 13 acres of the site, with the remaining 29 acres being sold to a third party. The relationship between Home Depot and the third party isn’t yet clear. A source said that as of last week Home Depot is “in control of all the real estate.”

Expo Design Center, a Home Depot division, operates interior design stores. A typical store consists of 105,000 square feet featuring kitchen, bath, appliances, lighting and other merchandise. Launched in 1991, Expo Design Center operates 15 stores nationally, including one in Huntington Beach. Plans call for 200 locations by 2005.

Fitting In

The Parker Aerospace property comprises 400,000 square feet of manufacturing, industrial and office space, with entitlements in place for an additional 200,000 square feet of office construction. While the campus is in a primarily business district, a Home Depot wouldn’t be out of place alongside the freeway and the Park Place shopping center across the street.

Home Depot officials at one time considered putting a Home Depot store at the site along with an Expo Design Center, sources said. But that option no longer appears to be under consideration.

Parker Hannifin’s Hiemstra said the company has considered selling the Parker Aerospace site for several years, believing that “the highest and best use of that property is not as a manufacturing location.” n

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