Internet retailer buy.com Inc.,looking to relocate from its four-story headquarters at The Summit Office Campus in Aliso Viejo to a bigger, single-story location,has the parameters of a deal for a new location in place, sources say, but can’t pull the trigger until it subleases the Summit space.
Conflicting information has buy.com’s potential new location as a 100,000-square-foot, single-story building in either Mission Viejo or the Foothill Ranch area.
However, as sources have indicated all along, the main stumbling block to any move remains finding a suitable tenant to sublease buy.com’s current 53,620-square-foot space.
“The reality of it is it’s a non-deal until they sublease their space, and I don’t know if it will be next month or six months from now,” said a source familiar with buy.com’s plans.
Buy.com’s plan to move, which became known a few weeks ago, was surprising because last year the firm signed a five-year, $8.3 million lease for its new space and was planning to expand into an additional 25,000 square feet.
Buy.com’s current space is being marketed throughout the brokerage community. Several firms have expressed interest and even inspected the company’s Aliso Viejo headquarters, including some that were referred to buy.com by Parker Properties officials, according to sources.
The deal-breaker among companies seriously interested has been the amount of the tenant improvement allowance buy.com would give any prospective sublessor. Many firms like to reconfigure space before they take up residence in a new building. In many cases, the cost for such changes is borne mostly by the landlord or company controlling the space, in this case buy.com.
“If someone wants new paint and carpet, (buy.com) officials would be fine with that,” said a source. “But if someone wants to come in and get $25 per foot (in tenant improvement allowances), that’s not going to happen.”
Another stumbling block has been buy.com officials’ unwillingness to divide the space to accommodate users who don’t need all 53,000 square feet.
“You’re looking for a square peg to fit exactly into a square hole,” a source said. “If someone needs 45,000 square feet, (buy.com) isn’t going to give it to them.”
On the other hand, one advantage buy.com officials have in marketing their space is that they are paying below-market rent. Parker Properties is marketing similar space for roughly $2.50 to $2.60 per square foot. Buy.com is paying $2.35 per square foot.
In addition to its current space, buy.com has an option on another 25,000 square feet at The Summit Office Campus. However, it is unlikely to occupy that space unless it is unable to sublease its current space and relocate.
Although their desire remains to relocate, officials at buy.com are less focused on that issue as they face more pressing problems on Wall Street, where the fortunes of online retailers have taken a decidedly negative turn. Buy.com recently closed its Australian business after six months, citing a lack of funding.
“They’re just worried about their stock right now,” a source said about buy.com officials. “If (a move) happens, fine. But I think they’re trying to put out other fires right now. (The move) went from a high priority 90 days ago to ‘It’s just something we’re working on.’ ”
Buy.com is the anchor tenant of The Summit’s Phase II, which is 80% leased. Other tenants include ThinkTank.com, HR Link Group Inc., Critical Path Inc., LenStar Group Inc. and Axxicon Molds Inc. Tenants in Phase I of the business park include QLogic Corp., Remedy Intelligent Staffing and Safeguard Health Enterprises Inc. n
