Market Brings Newcomers to Spectrum
By DANIEL D. WILLIAMS
Just a few years ago, it seemed high-flyers like Broadcom Corp. or corporate pillars such as Ford Motor Co. were just about all that could afford a coveted Irvine Spectrum address.
The recession,and a related drop in land and property values as well as interest rates,has changed that.
In recent weeks, a handful of smaller companies,including a printer, clothing maker and even a fishing gear supplier,have bought land or buildings in the Spectrum.
“You’re seeing more traditional businesses moving in,” said Jim Cunningham of the Newport Beach office of Grubb & Ellis Co., who represents the Spectrum’s master developer and dominant landowner The Irvine Company.
The Spectrum always has had its share of varied tenants. But the latest moves are by companies that two years ago might have been more apt to settle in points north or south of the Spectrum, where rent was cheaper and space easier to come by.
In a sign of how things were two years ago, 20-year Spectrum tenant Don De Cristo Concrete Accessories Inc., a blue-collar maker of construction products, left the business park in 2000 for bigger, cheaper digs in Westminster.
“For what we do, Irvine is becoming too expensive,” Don De Cristo’s Vasken Kassarjian said at the time.
Spectrum land and buildings still aren’t cheap. But these days an acre of land has fallen 10% to 30% below the $1 million or more asking price of a few years ago.
Buildings in the Spectrum also have come down a bit. Recent sales check in at about $100 a square foot, not too far off from a couple of years ago but below peak prices. Six months ago, Calvary Chapel of Laguna Beach paid $170 a square foot for a 25,026-square-foot Spectrum building.
Among the recent deals:
n Philip Quaranta, owner of R & B; Gear Inc., a maker of promotional beach towels, backpacks and other items, paid $2 million to the Irvine Co. for 2.2 acres. Quaranta plans to build a 33,216-square-foot headquarters on the site at Tesla and Goddard.
n The Kaszton Family Trust of Irvine paid $884,200 to Systems Partners LP of Laguna Hills for a 1.25-acre parcel at 6 Bunin. Plans call for a 19,000-square-foot building on the site that is set to be the base for the family’s design and printing company, Image Printing Solutions, now on Alton Parkway in Irvine.
n Ocean Equipment Inc., a yachting and fishing gear company, paid $2.4 million for a 20,747-square-foot building at 2 Thomas. The company recently moved from Newport Beach to the Spectrum.
n Sportswear maker Globe Trotter Clothing Inc. paid $1.8 million to KAPAAR Inc. for a 16,556-square-foot industrial building at 1 Autry in Irvine, where it recently relocated from Aliso Viejo.
Lower interest rates also are a key driver behind the recent buys, according to Cunningham of Grubb & Ellis.
“Financing is cheap,” he said. “It didn’t make sense to make these deals in the past. But it’s cost-effective now.”
A spokeswoman for R & B; Gear said her company plans to move from its current Irvine spot near John Wayne Airport to its planned Spec-trum headquarters by September.
“It was a really good location for a company like ours,” said Amy Healy, the company’s operations manager. “In the Spectrum, we’ll be in the middle of everything.”
R & B; makes beach towels, coolers and other products bearing the logos of big companies such as IBM Corp., Compaq Computer Corp. and PepsiCo Inc.
The company looked at existing buildings in the Spectrum for a year, Healy said, but couldn’t find a facility or lease terms to its liking. Then the Irvine Co. made more entitled land available.
“They started selling lots at the Irvine Spectrum and it made sense,” she said. “We could buy the land and then build the facility to our specifications.”
Dick Silva, a broker with the Newport Beach office of Irvine-based Lee & Associates Commercial Real Estate Services, represented R & B; in the deal.
“There’s not an abundance of the small, industrial buildings in Orange County that these owner-users are looking for,” he said. “But there’s plenty of zoned land you can build on in the Spectrum.”
The Spectrum has seen a steady flow of deals, according to Cunningham. He said he had 13 deals in 2001 and three so far this year.
“If the Spectrum has one land sale per month, that’s considered a great month,” he said.
The recent land sales have been small,less than 3 acres in size, Cunningham said.
“It’s been counter to the market,” he said. “Leases dropped, but the small sales remained steady. For the smaller owner-users, the benefits are tremendous. Their rates don’t go up. They see this as a good time to buy.”
The Spectrum is best known for technology names such as Broadcom, Quest Software Inc. and Intersil Corp. But tech companies aren’t taking space like they used to. That’s helped make room for smaller, more conventional businesses, sources said.
Several engineering firms have taken advantage of the situation and moved in, according to Cunningham. He also handled the building sale to Calvary Chapel, which took over a research and development building that the developer couldn’t find a tech taker for.
Cunningham calls the moves good for the Irvine Co. and the Spectrum
“It feeds the whole area, making it a better business park for everyone,” he said.
