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Thursday, Oct 6, 2022
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Space Race

A billionaire-backed aerospace venture that aims to send wealthy tourists into space has touched down in Orange County.

Virgin Galactic Holdings Inc. (NYSE: SPCE), a $6 billion-valued space company backed by Virgin Group co-founder Richard Branson, is setting up some of its executive offices at a fittingly named local office project: Flight at Tustin Legacy, the company confirmed to the Business Journal.

The company, which refers to itself as the world’s first commercial spaceline, is expanding outside of its New Mexico headquarters to a spot at the new creative office campus in Tustin, with a potential expansion here in the future.

This isn’t the first Orange County tie for the firm, which was founded in 2004 as a unit of London-based Virgin Group, co-founded by Branson in 1989.

Last July, the company named Michael Colglazier its chief executive.

Colglazier was president of Anaheim’s Disneyland Resort from 2013 to 2018 where he headed the planning for the $1 billion-valued Star Wars: Galaxy’s Edge, which opened in 2019.

Colglazier has kept ties to OC since then, living in the area and since 2016 serving as chairman of UCI Chief Executive Roundtable. The CEO Roundtable counts some 80 business leaders as members and is designed to support the development and well-being of UCI and area businesses.

The Tustin location is expected to hold the primary offices of Colglazier and other executives. The company and its affiliated businesses also have local operations in Long Beach.

Hiring, Relocation

Despite the CEO offices being located here, sources tell the Business Journal the new Tustin location, initially running a relatively modest 12,000 square feet, isn’t expected to be designated as the new headquarters for Virgin Galactic, which handles its flight operations out of Spaceport America—formerly the Southwest Regional Spaceport—in New Mexico.

Spaceport America is on 27 square miles of desert landscape.

The company also has a more than 200,000-square-foot campus in Mojave; that spot houses fabrication, assembly, hangar and office space, and is where the company performs ground and test operations, according to regulatory filings.

Still, Virgin Galactic could potentially ramp up its square footage and employee count at Flight, sources tell the Business Journal, though there are no clear plans to do so. The office campus, built in 2019, is at the former Marine Corps Air Station.

Sources indicate the company will initially relocate or hire about 50 people in Orange County with flexible plans to continue growing its OC footprint.

Virgin Galactic confirmed the lease with the Business Journal, but declined to share specifics. 

SPAC Deal

Virgin Galactic became the first space tourism company to go public in October 2019, when it closed on a reverse merger with Social Capital Hedosophia, a New York-based special purpose acquisition company already listed on the NYSE (see SPAC stories, pages 1 and 15).

Other players in the space tourism sector include Jeff Bezos’ Blue Origin and Elon Musk’s SpaceX, the latter of which has a modestly sized engineering department near Flight, in Irvine.

Bank of America Merrill Lynch anticipates the emerging sector to be worth $2.7 trillion by 2045.

Virgin Galactic has been building and testing its supersonic SpaceShipTwo planes for nearly two decades and begun test flying its first passenger ship in 2018.

It had its most recent test flight in December; it did not reach space as planned, but it landed safely back at Spaceport America with “pilots, planes, and spaceship safe, secure, and in excellent shape,” Colglazier said in a statement.

$80M in Pre-Sales

The company’s SpaceShipTwo system includes WhiteKnightTwo, a custom-built carrier aircraft, and SpaceShipTwo, “the world’s first passenger carrying spaceship to be built by a private company and operated in commercial service,” the company said. The planes can carry eight passengers, including two pilots.

Virgin Galactic said it has sold more than 600 tickets priced between $200,000 and $250,000, and has collected about $80 million in deposits.

Area execs reported to have signed up as future astronauts include Julie Hill, chair of the UCI Foundation.

The nearly two-hour voyage includes about five minutes in which passengers can leave their seats and experience weightlessness.

The company previously set a 2020 goal of its first flights, but more recent projections call for a 2022 debut, with Branson expected to be the first passenger on the space voyage.

Colglazier is also likely to be included in initial flights; regulatory filings show Colglazier’s employment contract allows him a seat on a forthcoming spaceflight, with up to three guests.

The employment contract also stipulated that his primary offices would be within 50 miles of Los Angeles.

As of mid-last week, shares for Virgin Galactic have more than doubled since the 2019 reverse merger. They are up nearly 90% in the past year, and about 30% higher since the new CEO’s hiring, for a share price of about $25.

Leasing Push at Flight

Virgin Galactic Holdings Inc.’s Orange County deal is part of a larger leasing push at Flight at Tustin Legacy, Lincoln Property Co.’s creative office project on the city’s former military base.

Nearly 80,000 square feet of deals have reportedly been inked in the past month.

Virgin Galactic’s deal is one of four notable leases signed.

Incipio, a technology solutions firm specializing in phone cases that was founded in Orange County in 1999, signed a 25,000-square-foot lease for one of the eight office buildings at Flight.

Technology solutions firm Syspro also signed a 25,000-square-foot deal.

In the final deal, medical technology firm PTS Advanced signed an 8,000-square-foot lease.

COVID Comeback

The leases bring Flight’s occupancy to above 40%, said Lincoln Property Executive Vice President Parke Miller. Not all companies that have leases at the project are currently using their space, given ongoing stay-at-home directives in Orange County.

Miller noted that the leasing activity is a positive sign following a tumultuous year for the office sector, which was hit hard by COVID-19.

“Big picture, 2020 was a very challenging year on the office leasing front, and we really worked to highlight the unique features of Flight that make it an ideal project for tenants in a post-COVID world,” said Miller, emphasizing the project’s indoor-outdoor connectivity, “direct-to-space” access, surface parking, modern air filtration systems and large open floor plans.

The latest set of deals partially makes up for several leases that fell through after the onset of the pandemic, Miller said.

“We had great leasing momentum and the first generation of office tenants had just begun moving in to their spectacular new workspaces right as COVID hit.”

Flight’s initial phase of development opened in 2019. The 470,000-square-foot project includes a 12,000-square-foot food hall (see related stories, pages 4 and 22) and meeting space.

Other tenants at Flight include Happy Money, a personal finance company that was among the first to move into the project last year; marketing company Branded Online; and Newport Beach-based InXile Entertainment Inc., a video game developer that was acquired by Microsoft Studios last year.

—Katie Murar

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