McLeodUSA Inc. has leased a 19,000-square-foot Tustin building, marking the first telecommunications deal this year in Orange County, according to real estate sources.
Cedar Rapids, Iowa-based McLeod signed a 10-year lease valued at $2.2 million. The company, which provides phone and other services, plans to use the facility as a switching center.
The lease marks McLeod’s entry to OC, according to a broker who worked on the deal.
The deal comes after a flurry of telecommunications leases in OC last year, mostly for data centers. But since December, the market has dried up, sources say.
“They were everywhere 12 to 18 months ago,” said Steve Schloemer of Colliers Seeley International Inc., who represented the landlord, Brandy-Sam, in the McLeod deal. Leland Bruce of Staubach Co.-West Inc. represented McLeod.
“I thought telcos had satisfied their need for space,” Schloemer said. “It surprised us that there was still someone out there looking.”
Observers say several OC cities have been branded “NFLs”,national fiber locations. That means the cities have major communications lines running through them,a lure for telecommunications companies.
“Orange County is a relatively telecommunications-rich area,” said Dennis Macheski, real estate economist for Colliers Seeley. “Locally, we have been growing at twice the national average in telco employment.”
With a falloff in Internet businesses and slower technology spending by other companies, though, some observers contend the local telecommunications real estate market has peaked.
“We’ll get more than our share, but the total amount of the pie will be shrinking over the next nine months,” Macheski said. n
