Orange County’s second-largest law firm plans to leave its posh Newport Center offices for more spacious digs in Irvine.
Fast-growing Knobbe, Martens, Olson & Bear has signed a letter of intent for a 10-year lease of 120,000 square feet, which will make it the anchor tenant of Opus West Corp.’s planned 14-story, 321,000-square-foot tower at The Irvine Concourse.
The lease signed by Knobbe Martens,which will move from The Irvine Company,owned building at 620 Newport Center Drive in July 2002, when its current lease expires,will eventually grow to 150,000 square feet.
Real estate observers estimated the average rent the law firm will pay to be $2.75 to $2.90 per square foot over the 10-year period. While Knobbe Martens and Opus West officials declined to discuss the value of the lease, one source placed the number at nearly $50 million.
James Bear, managing partner of the intellectual property law firm, said he worked with Irvine Co. officials for the past year and a half in an effort to find suitable space in the developer’s Newport Center buildings, without success.
“We are gobbling up about a half floor a year where we are, and over the last three to four years, we’ve been scrambling for space in Newport Center,” Bear said. “Newport Center is virtually fully occupied. We find ourselves unable to continue our growth there.”
Space Biggest Concern
The high rents in Newport Center,which have reached nearly $5 per square foot for some select space,was not a factor in the decision, Bear said.
“Frankly the driving consideration was that there wasn’t space to move to,” he said. “We looked at opportunities that were presented to us over the last two to three years to move where the price was a lot less and that by itself was not enough to make us move. Our principal consideration that dictated this move was availability of space.”
Bear said the firm will add 32 lawyers next month, including 20 in its Newport Center headquarters. Currently, the firm has 108 lawyers spread out in its Newport Center, San Diego, Riverside, Century City, San Francisco and San Luis Obispo offices.
The firm moved into Newport Center 15 years ago, occupying the top (16th) floor of the building in which it currently leases. Over the years, the firm has grown to occupy four other noncontiguous floors. Knobbe Martens considered moving a portion of its operations to another Newport Center building, but ultimately rejected that idea.
For Opus West, which expects to finalize the lease in the next 30 to 45 days, Knobbe Martens’ decision is a major coup. Signing the law firm means the Phoenix-based developer will have 37% of the planned building pre-leased.
“Any time you’re talking about pre-leasing (a building) you’d like to be 25% to 50% pre-leased,” said Paul Marshall, senior vice president with Opus West.
Construction on the 14-story building will begin in the second quarter, with completion slated to occur just in time for Knobbe Martens to move in.
Third Building on Horizon
Opus Center Irvine II will be the second of a planned three-building complex totaling just less than 1 million square feet in The Irvine Concourse complex at the corner of Main Street and MacArthur Boulevard in Irvine. Initially, Opus West had planned for Opus Center Irvine II to be a 12-story, 283,000-square-foot building, but modified those plans to more efficiently take advantage of anticipated extra parking spaces from a planned parking structure.
The 12-story Opus Center Irvine I building has been completed and is approximately 75% leased, Marshall said. He declined to discuss the average rents for those leases.
Part of an existing parking lot next to the Wells Fargo Tower in the Irvine Concourse will be razed to make room for the new building. Marshall believes the remaining parking slots coupled with space at a recently completed parking garage will be enough to accommodate the needs of tenants.
Marshall declined to discuss terms of the Knobbe Martens lease or the planned asking rates on the new building.
“I would say we’re satisfied with the absorption in our first building and the way the market is performing,” Marshall said.
“Based on the way that the rates are today and where we expect them to be by the time we finish this building, we’re comfortable” Opus West will be able to achieve the necessary rate level to justify new construction, he added.
