Raytheon Co. is expanding its local operations with a Brea lease that is among the largest seen this year.
The company leased 78,000 square feet of office space at 120 S. State College Blvd., where it is taking up a three-story building, according to real estate sources familiar with the deal.
The building, near the Orange (57) Freeway, is one of six in Brea owned by Los Angeles-based Maguire Properties Inc.
The lease appears to be a big expansion for Raytheon and could help boost its local presence by nearly 50% once the office is fully occupied. The building’s designed to hold about 300 people.
Raytheon now has about 750 employees in Orange County, primarily in neighboring Fullerton. The Waltham, Mass.-based company is the 10th largest aerospace and defense contractor operating in the county, according to the Business Journal’s 2007 list.
Raytheon also has operations in Huntington Beach, Newport Beach, Irvine and El Segundo.
The company is keeping its main local operations in Fullerton, according to brokers. Raytheon has had operations in Fullerton since acquiring Hughes Aircraft Co. in 1997.
Raytheon is set to continue operating out of roughly 400,000 square feet of space in Fullerton, said Jeff Sharpe, a broker for the Irvine office of Cushman & Wakefield Inc. who represented Raytheon in the Brea lease.
The company develops radar systems and does air traffic control work in Fullerton as part of a venture with France’s Thales.
Raytheon, which also makes missiles and satellites, isn’t saying what type of operations it plans to move to Brea. The company is set to move near the end of summer.
Leasing the entire building should provide the company additional security, a likely selling point, according to brokers.
Big Deal for OC
The Brea deal is one of the largest expansion-related office leases signed in the county this year. OC’s office market has seen few big leases in the past few quarters, as tenants have been hesitant to commit to deals in the shaky economy.
The State College office is part of Maguire’s six-office Brea Campus, which totals about 535,000 square feet of space.
Maguire’s Brea space was 44% full at the end of the first quarter, the lowest occupancy rate of any OC market for the landlord. Countywide, Maguire’s offices, which have been hit hard by the collapse of the subprime mortgage industry, are about two-thirds full.
Much of the empty Brea space is due to the departure of mutual fund manager Capital Group Cos. In the past year, the Los Angeles-based company moved much of its local operations from Brea, including from several Maguire offices, to a new 615,000-square-foot campus in the Irvine Spectrum.
Maguire isn’t the only landlord in Brea having a tough time leasing its buildings.
“There are a number of large blocks of space in Brea that are available,” said Tom Abel, a broker with the Anaheim office of CB Richard Ellis Group Inc.
Brea’s office market totals about 4.1 million square feet and is home to a handful of corporate headquarters, operations of Japanese companies and other businesses. Beckman Coulter Inc., one of OC’s largest public companies, plans to move its headquarters from Fullerton to Brea next year.
At the end of the first quarter, the vacancy rate in Brea was about 17.4%. Factoring in sublease space the availability rate for Brea was 22%. Both figures are above the county average, according to CB Richard Ellis.
The subprime mortgage implosion has been felt in the city. At the Olen Pointe Brea campus, owned by Newport Beach-based developer Olen Properties Corp., a new building that served as the headquarters for ResMae Mortgage Corp. is back on the market.
All five floors of 6 Pointe Drive, a 131,687-square-foot building that opened in 2006, is up for sublease. ResMae vacated the building last month when it moved a loan servicing division to the Midwest, according to Abel, who is marketing the building.
The original lease for the Olen Pointe building runs through 2016 at $2.25 per square foot a month.
The average asking lease rate in Brea is about $2.59 per square foot, compared to the countywide average of $2.72 per square foot.
