L.A. Fitness Moving to Spectrum Tower
By DANIEL D. WILLIAMS
A big hole in the Irvine Spectrum left by Western Digital Corp.’s 2001 move to Lake Forest is slowly filling up.
Gym operator L.A. Fitness recently signed a deal with The Irvine Company to move its corporate headquarters from Newport Beach to a 42,000-square-foot space at 8105 Irvine Center Drive, Western Digital’s former high-rise digs.
The deal brings the 345,000 square feet of space Western Digital left to about 38% full. Another tenant is close to signing that would leave the building about half full, according to Bill Halford, president of The Irvine Company Office Properties, the Irvine Co.’s commercial arm.
“We feel confident about the office market and see prices beginning to tick up in the near future,” Halford said.
The office market has been among the hardest hit in the real estate downturn.
South County office vacancies are running at about 20%, or double what they were a year ago. Lease rates also have slumped from a year ago.
Western Digital’s former space was empty for about 10 months while the Irvine Co. renovated the building, Halford said.
“We completed significant work to the lobby and common areas,” he said.
The big shift came in making the building more appealing to multiple tenants, said Bob Thagard, vice president with Newport Beach-based Orion Property Partners Inc. who represented L.A. Fitness. Western Digital had occupied the entire building.
L.A. Fitness has started moving to the Spectrum from its 28,000-square-foot headquarters at 1301 Dove St. near John Wayne Airport.
Interest in the former Western Digital site picked up in November, Halford said.
“We’ve done 24 deals on the property in the last five months,” he said.
The biggest demand is coming from service companies wanting an average of 5,000 square feet, Halford said. Such deals take up 125,000 square feet of the building, he said.
L.A. Fitness’ lease is the largest so far. A deal for 40,000 square feet is in the works, according to Halford, who said it would be finalized within weeks.
Halford wouldn’t name the potential tenant, but said the company would fit in with the current makeup of the building, which has signed on insurance, banking and law firms.
“To lease 170,000 square feet in five months,we think that is significant in this economy,” Halford said. “While the county experienced negative net absorption during this same time frame, we filled half a building.”
Roughly 60,000 square feet of the leasing has been for spec suites, Halford said. Spec suites are offices that the Irvine Co. has fixed up and leased to tenants looking for turnkey space.
“We’re finding huge demand from smaller tenants,” he said.
Other tenants taking space at the former Western Digital building are Taiwan’s Acer Laboratories Inc. with 7,000 square feet, Wells Fargo & Co. with 3,300 square feet and Santa Ana-based First American Corp.’s title arm with 5,000 square feet.
Most tenants are signing on for three- to five-year leases, Halford said. The Irvine Co. has been able to avoid big discounts, he said.
“We think all of this activity is a strong indicator of a recovering market, at least for high-quality buildings,” Halford said. “In a recovery, you see a flight to quality first.”
The former Western Digital building is one of two Spectrum high-rises (Quest Software Inc. occupies the other one). The building’s stone facades and massive stainless steel doors give it an urban feel in the sprawling business park dominated by two-story technology buildings.
“It’s a one-of-a-kind building,” Halford said. “It’s like buildings you see downtown in San Francisco and New York City.”
