Enfrastructure Looks East, Still Filling OC Campus
By ANDREW SIMONS
Aliso Viejo-based Enfrastructure Inc. is near a deal to expand to the East Coast as early as next month, company officials say.
“I anticipate we’ll be in the East Coast markets soon,” Chief Executive James Watson said.
Watson declined to offer specifics about an East Coast expansion for the company, which has plans for a network of campus-like facilities for companies, especially technology startups.
The move could mark a positive step for Enfrastructure, which had a cool reception to its business last year.
The company had planned to open campuses in New York, Northern California and Colorado last year and start expanding to Europe by now.
But the company hasn’t filled its Aliso Viejo facility as quickly as hoped and cut its staff of 60 in half last year as it focused on boosting occupancy in Aliso Viejo.
An East Coast expansion could indicate that Enfrastructure’s strategy is starting to bear fruit.
Last October, Enfrastructure officials predicted the company’s Aliso Viejo campus would be near full by last December. At that time, Enfra-structure had filled 70% of its space. Today, occupancy is at 78%, still off from the company’s original goals in a tough office market. Even so, Enfrastructure has confounded some critics who didn’t think it would get this far.
Company officials now predict the campus will have 90% occupancy by July.
Enfrastructure said it doesn’t want to completely fill the Aliso Viejo facility because it needs some buffer room to move around tenants whose staff sizes often change.
The venture faces a rival that has a head start on the East Coast. New York-based TechSpace Inc. provides office space for startups and, through a partner, access to venture capital. Founded in 1997, TechSpace has similar campus-like facilities in San Francisco, Austin, Boston, Toronto, Miami and London.
But Enfrastructure officials point to a satisfied client base as a mark of its ability to win over customers.
“The space that we used to be in was nice, but this is much nicer,” said Sudhir Bajaj, chief executive of Enfrastructure tenant PlanetSoft Inc., a maker of financial software for large companies. “It’s nice not have to employ an engineer on staff to deal with system outages.”
Enfrastructure offers tenants just about all they need to run their businesses, from phone lines to data center services. The company has run an aggressive marketing campaign, including ads that feature several of the campus’ amenities, including a gym, bar, cafeteria, spa and sleep rooms.
(One ad that ran in the Business Journal featured a young, striking Rebecca Duncan, chief executive of Duncan & Associates. Turns out, Duncan and her company aren’t real. The ad featured a model, though the statement attributed to Duncan actually came from an Enfrastructure tenant who didn’t want to be featured in an ad because of the follow-up calls it would generate.)
Enfrastructure has tweaked its business plan. At first, officials expected tech startups to fill their tenant roster. Now it hosts landscape architects, building preservationists and law firms.
Another change: Enfrastructure is leasing space at its data center to outside companies because it found tenants weren’t using all the capacity.
Enfrastructure officials say its investors are happy with the company’s progress, despite some early skeptics in the real estate community, among others.
“We’ve all worked hard to build this company,” Watson said. “We’ve just been misunderstood.”
One of the biggest misconceptions is that Enfrastructure started as an incubator, Watson said. Incubators such as Pasadena-based Idealab invest in and grow the companies on their campuses. Once a hot business model, incubators have flopped with the tech downturn.
“We’re not an incubator,” Watson said.
That misconception underscores a problem for company officials: keep Scott Blum, one of the company’s largest investors, co-founders and owner of Internet retailer buy.com Inc., from commenting publicly about the company.
Blum, who runs an incubator called ThinkTank Holdings LLC, was one of Enfrastructure’s most high-profile spokesmen during the dot-com boom. He had originally envisioned ThinkTank acting as an in-house incubator for Enfrastructure.
Added Watson: “We need to make sure we’re the company’s spokesmen.”
Blum, who admits he has a heavy hand in the companies he starts, seems like he might be distancing himself from his investments. The longtime Orange County entrepreneur and investor recently moved to Jackson Hole, Wyo., only five months after he took struggling buy.com back private.
