Tucked away in the hills of Aliso Viejo, Enfrastructure Inc. is luring tenants to its campus, which offers growth companies everything from high-speed telecommunications to onsite dry cleaning.
But the company has switched gears as demand for space by young technology companies has withered.
“Our goal has been to be fully stabilized by the end of the year,” said Enfrastructure Chief Executive James Watson.
When they set out in September, the partners behind Enfrastructure had a clear idea of what they wanted to build: a network of campus-like facilities for companies,and especially young tech companies,to set up shop in.
The sites are to feature Internet-connected offices, personal computers and Web servers from IBM Corp., software and services from Microsoft Corp. and tax and accounting services from Arthur Andersen.
“The role of Enfrastructure is to provide world-class talent and access to that world-class talent to the entrepreneurs who are on campus,” said Arthur Andersen’s Paul Keglevic at Enfrastructure’s New York launch nine months ago.
Arthur Andersen partnered with Microsoft, IBM and Avaya Inc. to launch Enfrastructure, the brainchild of buy.com Inc. founder Scott Blum.
But since early last year when Blum conceived of Enfrastructure, the market for technology public offerings has all but dried up, sending shock waves through the ranks of companies originally seen as Enfrastructure’s core market.
A look at Enfrastructure’s clients indicates how many different types of businesses the company now is courting.
With tenants ranging from landscape architects and building preservationists to personal injury law firms, several denizens are a far cry from the tech up-and-comers the venture initially envisioned.
No Formulas
But even if Enfrastructure isn’t getting the clientele it first had planned, it still is getting business.
“We have 11 companies that have signed up, and we have about 40 client companies right now,” Watson said. “This is very big.”
Enfrastructure officials say that each lease is negotiated separately and there are no strict formulas.
Prospective tenants can choose from several different plans that range from basic occupancy, which features things like minimum server facilities and office furniture, all the way to premium plans, which offer deluxe technology for high-demand clients and more space.
“We have a broad base of business services and technology services for our clients,” Watson said. “Our ideal client base is somebody who is interested in consuming technology.”
In another subtle shift, Enfrastructure officials say they plan to start offering services beyond the walls of their campus.
Later this year, Enfrastructure executives say they expect to launch a service dubbed virtual infrastructure, which will allow non-tenant companies to rent out space in the company’s massive server room featuring IBM machines and Microsoft software.
“This could be one of the most exciting things we’re doing right now,” Watson said. “We have made an investment and we’re able to include outsource solutions.”
Watson said Enfrastructure is talking with the San Francisco 49ers about handling some of the team’s Web operations.
Enfrastructure has made other changes, too.
Perhaps most significant: the company has scuttled plans for a facility in Colorado this year, opting instead to open a campus closer to home in Los Angeles.
“We’re constantly re-evaluating our plans,” said Mike Drury, Enfrastructure’s vice president of marketing. “Will we open a campus in Colorado this year? No. Does this mean we won’t ever open a campus there? No.”
Incubator Inside
Enfrastructure had been talking with several companies about starting an incubator at a planned Colorado campus.
The incubator was to double as a tenant the way Blum’s incubator, ThinkTank LLC, does in Aliso Viejo. Enfrastructure, whose officials emphasize it is not an incubator itself, had planned on housing incubators at every campus.
The venture faces competitors that are further ahead in geographical expansion.
TechSpace Inc., based in New York, provides offices already hooked up with tech services and even offers access to venture capital through its own partner company.
TechSpace, which was founded in 1997, has similar campus-like facilities in San Francisco, Austin, Boston, Toronto, Miami and London.
Enfrastructure says it plans to open facilities in New York, Los Angeles and San Francisco by the end of the year.
As it seeks a broader range of tenants, one challenge Enfrastructure faces is winning over skeptics in the real estate industry.
Bob Flaxman, chief executive of Irvine-based Crown Realty & Development Corp., said the Enfrastructure campus offers some services clients need.
But many companies don’t want someone else dealing with their technology, he argues.
“Most people who run their own businesses, big or small, have their own way of doing things and they don’t want someone to hold their hands,” said Flaxman, whose company developed Anaheim’s Stadium Crossings and buildings in Los Angeles. “What do you do with the infrastructure you already have? Take it with you?”
Watson downplays the issue, pointing to Enfrastructure’s backlog of clients. The company expects its Aliso Viejo facility to be full by year’s end and projects new facilities will fill up just as quickly.
Watson also points to the lifestyle amenities available in Enfrastructure’s campus as a huge draw.
Social Events
Each campus comes with a bar, spa, caf & #233;, copy center, cleaners and garden for use by all tenants.
There’s even a so-called “sanctuary” for contemplation or even napping, as well as large conference and meeting rooms.
Enfrastructure tenants also interact with each other outside of their respective offices at organized social gatherings. Some have even gone so far as to conduct business with one another.
“This facility is just wonderful,” said Ardelle St. George of St. George & Carnegie, a law firm at the campus.
Still, that doesn’t erase doubts in the industry.
“They’re mixing real estate and expertise in various technological functions and charging their clients more for rent,” Flaxman said. “I’m skeptical.” n
