Endologix Inc. is doubling its space with its move to a new corporate headquarters.
The Irvine-based maker of medical devices for treating aortic abdominal aneurysms will move to a new location within the Irvine Spectrum, according to a Securities and Exchange Commission filing.
Endologix said it signed a lease agreement June 12 with Milwaukee-based Northwestern Mutual Life Insurance Co. for a pair of buildings at 2 Musick and 35 Hammond.
The lease starts Jan. 1 and runs for 15 years; Endologix will pay $1.941 million a year as its initial base rent, according to the filing.
The two buildings have 129,000 combined square feet and will replace the company’s existing facilities at 11 Studebaker and 1 Hughes, according to the filing.
Units of Japan-based conglomerate Toshiba Corp. previously occupied both buildings. Toshiba recently vacated the Musick building and left the Hammond building about 10 years ago.
Endologix is moving because it has outgrown its current facilities, which have about 57,000 square feet of space between them, said Todd Abraham, the company’s vice president of operations.
“We have the high-class problem of continued significant growth,” he said.
Endologix has annual sales of some $105 million and has been growing revenue at roughly a 20% clip over the past few years, according to Abraham.
“We project that we will run out of capacity if we didn’t make a move—we want to make sure we stay ahead of that growth curve.”
“Staged Move”
Endologix “will be planning a staged move, starting probably in the very late second quarter of 2014, and then we would complete it targeting the end of Q3 2014,” Abraham said.
Musick and Hammond will require “pretty significant” renovation before Endologix moves in.
“It’s pretty much a complete do-over internally in each building to get them to meet all of our specific needs,” Abraham said, adding that laboratories, clean rooms and warehousing will be among the changes.
• Headquarters: Irvine
• Business: Medical device manufacturer
• Founded: 1992
• Ticker symbol: ELGX (Nasdaq)
• 2012 revenue: $105.9 million
• Recent earnings: ($9.3 million) for Q1
• Market value: About $834 million
• Notable: Signed lease for two buildings that will about double space in Irvine Spectrum to 129,000 square feet
The device maker hasn’t yet picked a contractor. It has tapped David Oh, West Coast workplace studio leader for Charlotte, N.C.-based Little Diversified Architectural Consulting, as the project architect. Abraham has worked with Oh on previous jobs.
Endologix looked at other buildings in Orange County but “had a strong bias towards wanting to stay in the Irvine area and preferably as close to our current facility as possible,” Abraham said.
Tim Schramm, a principal with Cresa Partners’ Newport Beach office, represented Endologix. The company is also using Cresa’s project management team.
Cresa and Schramm “did a fantastic job. They were 100% focused on our needs; they spent time to get close to our company to really understand our needs and our key trigger points,” Abraham said.
Endologix’ willingness to lease both buildings “made the deal a little more compelling to us,” said Trent Walker, a senior vice president in Voit Real Estate Services’ Irvine office who represented Northwestern Mutual.
“We looked at this as a pretty good deal. Endologix is an up-and-coming company,” Walker said.
Endologix, which had a recent market value of about $834 million, has posted more than $60 million in losses the past two years but continues to get Wall Street’s attention for its product lineup and research and development. Analyst coverage expanded in 2012 while company executives tirelessly stumped the industry-conference circuit.
Abdominal aortic aneurysms are found in about 1.7 million Americans, primarily men older than 65. Sufferers have a 70% mortality rate if the problem’s not repaired, according to the company.
“We are a smaller company relative to our competitors, and our strategy has been over the last several years very clear— that we will grow and take market share through innovation. So far, that’s working well for us,” Chief Executive John McDermott told the Business Journal late last year.
Endologix in last year’s interview with the Business Journal made it clear that it intended to keep its manufacturing in Orange County.
“We don’t have any plans to move it,” said McDermott, who joined Endologix in 2008 after running the peripheral vascular business of Murray Hill, N.J.-based device maker C.R. Bard Inc.
Endologix has a “well-developed and a well-established workforce. It takes years to get the right people and the right training,” McDermott said. “It’s not worth it to us to disrupt that.”
