Internet retailer Buy.com Inc. is considering subleasing its shiny new 53,000-square-foot, four-story headquarters at The Summit Office Campus in Aliso Viejo in favor of a one-story, 100,000-square-foot site in the area.
The potential move is surprising because Buy.com last year signed a five-year, $8.3 million lease at the Summit and planned to expand into an additional 30,000 square feet there.
A Buy.com spokeswoman acknowledged the company is considering a move, but said no final decision has been made.
Buy.com’s departure would be a loss to the Summit, which owner Parker Properties has marketed as a technology-friendly business park ideally suited for companies such as the online retailer.
Lee Redmond, a principal with Parker Properties, said Buy.com has not informed his firm that it is considering a move.
“We’ve had no conversations with Buy.com,” he said. “It’s news to us. We don’t know anything about it.”
But, Redmond added, “They clearly have to have our approval” before subleasing space.
Buy.com has found the prospect of operating out of a four-story building too cumbersome, and would rather have a bigger one-story facility that it can renovate to suit its needs, a source said.
“Ideally what they would like to have is a large 100,000-square-foot building with lot of parking that they could add a lot of money to and make it a funky, nice place to work in,” the source said.”They would want amenities and (things such as) a volleyball court, which these tech-type employees are seeking.”
Buy.com is undertaking the search for new digs and planning renovations even as it tries to stem ongoing losses. For the second quarter, Buy.com posted a net loss of $23 million, vs. $25 million in the year-ago quarter, although the company’s gross profit of $11.8 million for the three months marked its second straight quarter in the black operationally. But, like other Internet retailers, Buy.com is out of favor on Wall Street.
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. Other tenants in the larger business park include QLogic Corp., Remedy Intelligent Staffing and Safeguard Health Enterprises Inc.
The potential loss of Buy.com as a tenant doesn’t stand to hurt Parker Properties financially, as Buy.com is still liable for the rent on its space. Moreover, if the move were to happen, Parker Properties could end up renegotiating the lease with any new prospective tenant. Currently, real estate sources said, Buy.com is paying below-market rents for its space. The average for the Summit is $2.50 a square foot, according to CoStar Group Inc.
Buy.com officials already have identified a couple of buildings in South County that may be able to accommodate their needs. If they are unable to find a tenant to sublease their current space or can’t come to terms on a new building, Buy.com officials may seek to relocate to different facilities within The Summit, a source said.
“If everything breaks the right way, this would happen (soon),” said a source. “But this will be an extremely difficult transaction to execute.” n
