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Knobbe Wants Resort Feel at Airport-Area Office

Knobbe Martens Olson & Bear LLP, Orange County’s largest law firm by number of local attorneys, is looking to bring a touch of the resort lifestyle to the Irvine office tower that holds its headquarters.

Knobbe is the managing member of 2040 Main LLC, which owns the 307,000-square-foot office tower at 2040 Main St. It recently announced plans for a bevy of changes at the 14-story property as part of a bid to increase its occupancy rates.

Among the more notable changes at the building are plans to give tenants a resort-like experience in terms of amenities and customer service.

Expect to be treated to music and flavored spa-style water in the building’s lobby, according to officials at brokerage Stream Realty Partners, whose Irvine office was recently selected to oversee the changes and provide leasing services.

Tenants also will have access to an executive assistant-style concierge, shuttles to nearby shopping areas such as South Coast Plaza, monthly tenant appreciation events, and other perks.

Even the scent of the office is expected to change, according to Colby Annett, co-managing partner of Stream Realty’s Irvine office. Plans are to pipe in a resort-like fragrance in the building’s lobby.

The goal is to “provide businesses with the next generation of service and the highest level of amenities in Orange County,” said Annett, who runs the Irvine office of Stream Realty with his brother, Blaine Annett.

The leasing assignment is one of the more notable ones in the area around John Wayne Airport for Dallas-based Stream Realty, which opened its Orange County office in 2009.

The company—which only represents landlords in lease negotiations—is making a push to expand its presence in the area, especially as building owners re-evaluate strategies for leasing up their buildings amid the improving economy.

“We’ve found that more corporations want services such as (those planned at 2040 Main) as part of their office building experience,” Colby Annett said. “Tenants want quality, luxury, service, and convenience.”

CoStar Group Inc. records show the 2040 Main building, part of the Irvine Concourse office campus that sits next to the San Diego (405) Freeway, to be about 80% leased—a percentage slightly below the average for other high-end offices in the airport area. An additional floor of space at the building is expected to be vacated next year.

Monthly rents are listed at $2.35 per square foot.

Knobbe Martens occupies about 40% of the building and leases out the rest of the space. Other tenants include fellow law firm Clausen Miller LP, as well as Morgan Stanley Smith Barney LLC.

The goal of the changes is to get the building fully occupied again, according to Steven Nataupsky, managing partner of Knobbe Martens.

The firm employs nearly 170 lawyers in Orange County—the most of any law firm here—and is one of the country’s largest intellectual property law firms.

Knobbe and its partners in 2040 Main LLC paid close to $106 million for the building in 2004. The LLC reportedly outbid Newport Beach-based Irvine Company to buy the building, which opened in 2002, with the law firm serving as its anchor tenant.

CMBS.com, a website that tracks the commercial mortgage-backed securities market, reports that 2040 Main LLC has a $67 million loan currently tied to the building, and that the owners are current on their loan payments. The website still lists the loan as being on its watchlist, presumably because of vacancy levels at the office.

There’s been no indication that 2040 Main LLC is looking to sell the building, even with prices for other area office properties on the rise. A slightly larger office next door, at 2030 Main St., is expected to trade hands in the next month at a price in excess of $100 million.

Newport Beach-based Olen Properties owns a junior loan tied to the 2040 Main building, which it bought at a discount. The company isn’t expecting to see the office on the trading block any time soon, said Igor Olenicoff, Olen’s president.

“We would be pleased to own it at the amount of debt against the property, however, I am sure the current owners have no intention of letting it go,” said Olenicoff, whose company owns the nearby Century Centre office complex on Main Street.

“We feel very secure in our position and certain that there will not be a default of any type,” Olenicoff said last week.

Olen’s junior loan has provided “quite a nice return,” he said.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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