Jacobs Engineering Group Inc., one of the largest engineering and architecture firms in the country, is moving its local headquarters from Santa Ana to a trophy building in Irvine.
The Pasadena-based company, the fifth-largest engineering company with offices here, signed a 49,111-square-foot lease at The Michelson, a 19-story tower that overlooks the San Diego (I-405) Freeway near John Wayne Airport.
The space will be used as Jacobs’ main local office once the move is completed in June.
Jacobs also has offices in Cypress and employs more than 400 people here overall.
The lease in Irvine is for 10 years, according to the Michelson’s owner, New York-based Emmes Group of Cos.
Financial terms weren’t disclosed.
Jacobs is the largest tenant that Emmes has signed at the 533,000-square-foot building. It bought the three-year-old property for about $160 million in mid-2009 from Los Angeles-based Maguire Properties Inc, which now goes by MPG Office Trust Inc.
Emmes got the Michelson at roughly a 40% discount to its construction cost. It’s the company’s only property in California and was about 60% occupied at the time of the Jacobs deal.
The deal and a flurry of smaller leases have brought occupancy at the building to 80%, according to Bob Shibuya, managing director for Emmes.
With a few more leases at the Michelson, Emmes could turn its attention to more acquisitions in the area, he said.
Company officials told the Business Journal in 2009 that Emmes was looking to buy 2 million to 4 million square feet of local office space in the next few years. No new buys in the area have been announced to date.
Leasing has kept the company’s local office busy of late. Emmes has signed close to 74,000 square feet of leases in the past three months, according to Shibuya, who joined the landlord last year from DTZ Holdings PLC, a London-based real estate investor.
Other recent deals at The Michelson include an 11,310-square-foot lease with Irvine-based office furnishings company Systems Source, and smaller deals with real estate brokerage Eastdil Secured LLC of New York, and River-side Partners, a Boston-based private equity firm.
“Companies are starting to talk about growth again,” said Shibuya. “Confidence in the business community is starting to increase.”
Jacobs Growing
Jacobs appears to be part of the growth trend. Its local offices brought in close to $48 million in engineering-related billings last year, and another $37 million in architectural billings—the third-most of any local company—according to Business Journal data.
That was a 4% increase in engineering revenue from the prior year, while architecture revenue was up 9%.
Companywide, Jacobs has about $10 billion in annual revenue through a variety of technical, professional, and construction services. It has a market value of about $6.5 billion.
Jacobs currently has its main OC office a few miles away in Santa Ana’s Hutton Centre office complex, just off the Costa Mesa (55) Freeway. That complex holds the local headquarters for another one of the area’s larger engineering firms, CH2M Hill Cos.
The move gives Jacobs an address at a building many brokers consider to be one of the county’s premier office towers. The company’s initial rates are beleived to be well below the peak of the market several years ago.
Tenants who signed deals at The Michelson prior to the recession are believed to paying monthly rents in excess of $3 per square foot. Most high-end office space in the Irvine area now is being leased in the $2.25 per square foot range, according to brokerage data.
Existing tenants at the building include law firms Gibson, Dunn & Crutcher LLP, Jones Day and Bryan Cave LLP, as well as Hyundai Capital America, whose name is on top of the tower.
Eric Olofson and Rick Kaplan of brokerage Cushman & Wakefield Inc. represented Jacobs in the Michelson lease.
Jacobs will take the bulk of the fourth and fifth floors.
A majority of the office space still available at the building is on its lower floors.
A sizeable deal once rumored to be in the works for The Michelson isn’t anymore, according to Shibuya.
Aliso Viejo-based TechSpace Inc., which rents out furnished office space to smaller, growing tenants, was said last year to be interested in taking a few floors on the bottom of the building.
That deal appears to have fallen through.
