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What’s on Broadcom’s Drawing Board?

The Great Park office campus designed to hold the new headquarters of Broadcom Corp. suggests that the chipmaker—currently in the midst of cutbacks—could be preparing to add several thousand jobs in Orange County over about the next five years.

Plans for a 2-million-square-office campus designed to hold Broadcom at the former El Toro Marine Corps air station in Irvine were approved by the city’s planning commission earlier this month, moving the long-watched development one step closer to reality.

The eight-building project promises to be the largest office development in Orange County in well over a decade.

Broadcom has yet to officially confirm that such a deal is in place, however. Executives with Aliso Viejo-based FivePoint Communities Management Inc., the master developer of the Great Park Neighborhoods land where the campus would be, have also declined to comment on the status of negotiations.

Broadcom executives were nonetheless in attendance at this month’s planning commission hearing, and numerous real estate sources and city officials say the company is close to final terms on a deal to relocate its headquarters to the Great Park.

The size of the proposed office campus at the Great Park suggests that Broadcom sees its local workforce growing significantly in coming years.

University Research Park

The company already is OC’s largest office tenant, with a current lease for about 920,000 square feet from Newport Beach-based Irvine Company at University Research Park, a business park near the University of California-Irvine and San Joaquin Hills (73) Toll Road.

The chipmaker’s initial lease at University Research Park expires in 2017, but the company is believed to have recently signed at least one short-term extension with the landlord that would run through 2018 or 2019.

Broadcom employs nearly 2,500 people in Irvine, about double the number of employees it had here a decade ago, according to Business Journal records.

The company was the city’s fourth-largest employer as of June 2013, according to city records.

Only UC Irvine, which accounts for about 21,800 jobs in the city, employed more than 3,000 people as of last year.

Broadcom’s workforce would appear likely to easily surpass that 3,000-employee headcount in the next few years, based on the size and plans filed for the 78-acre Great Park campus.

Typical parking ratios for office developments mean that the 2-million-square-foot campus could accommodate about 8,000 employees.

FivePoint’s initial plans filed with the city call for only 7,200 parking spots at the 72-acre campus. The developer’s filings have noted that carpooling, the proximity of Irvine’s train station, and other factors mean the “employee parking needs at build-out of the proposed R&D campus are projected to be as low as 5,600 to 6,000 stalls.”

That would represent a more than doubling of headcount at Broadcom’s headquarters, even at the low end.

Engineering-related positions would appear to be the most likely source of additional jobs in Irvine, assuming the project moves ahead as planned.

Six of the eight proposed Great Park offices would “serve as engineering buildings, which will feature mixed lab space and standard office space,” according to city filings.

The other two buildings at the campus would include a five-story, 308,000-square-foot office used for executives and administration, among other uses, and a 34,000-square-foot fitness center.

FivePoint filings with the city’s planning commission this month suggest the project could be built out by 2017, although the development’s construction timeline appears to have more flexibility, given Broadcom’s expected short-term lease renewal at University Research Park.

Baseband Cuts

Broadcom executives have given little indication that the company is on the fast track for growth. Indeed, last week saw the company detail its plans to cut its companywide workforce—which stood at about 12,550 people at the end of 2013—by about 2,500 positions over the remainder of the year (see related story, page 7).

The company’s second-quarter earnings report last week included confirmation that it will wind down its cellular baseband chip business—a key reason for the job cuts.

The number of local positions that will be cut as a result of the wind down of the baseband unit were not disclosed.

Baseband chips are essentially the technical brains of mobile phones.

The company said in June that it planned to exit its money-losing baseband chip business—which is dominated by San Diego rival Qualcomm Corp.—through either a sale or wind down.

An apparent dearth of suitable buyers led Broadcom to “pursue a wind down, which minimizes the ongoing losses from the business, and enables us to focus on our core strengths that much more quickly,” Chief Executive Scott McGregor told analysts last week.

Broadcom’s stock traded near its 52-week high following the earnings report and disclosure of the job cuts. The company currently has a market value of about $22 billion.

Broadcom executives also said last week that they planned to close or consolidate 18 locations as part of the baseband shut down.

Additional consolidation from out-of-town offices to Irvine would appear to be one way Broadcom could fill some of the space proposed for the Great Park, along with future acquisitions.

Smaller Purchases

A series of smaller purchases are more likely than any blockbuster deal in the near-term, based on McGregor’s remarks to analysts last week.

“Historically Broadcom has bought on the order on one or two companies a quarter, and I think you will continue to see us active in the M&A space,” McGregor said. “We tend to prefer a lot of the smaller transactions, though, smaller and mid-sized [transactions]. So by that, we mean, small hundreds of millions of dollars generally.

“We have made excursions significantly above that, but I don’t see that as a common thing for us,” McGregor 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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