Rutan & Tucker LLP, the county’s largest law firm, has signed a deal to stay at its Costa Mesa headquarters for at least another 15 years.
The firm’s new lease, for 112,000 square feet of office space at 611 Anton Blvd., extends and expands an existing deal that was set to expire in 2009, said Mike Hornak, Rutan & Tucker managing partner.
The lease is likely to reverberate beyond Costa Me-sa.
The move takes one of the county’s largest professional services firms out of the market for space at one of six office towers being built around John Wayne Airport and in the Irvine Spectrum.
Rutan, which has about 150 lawyers and 300 employees overall in Orange County, signed a 12-year deal to stay at Pacific Arts Plaza, owned by Los Angeles-based Maguire Properties Inc. Terms weren’t disclosed.
The deal is a big win for Maguire.
Rutan had been aggressively courted by some of the area’s other office developers, which have close to 100 floors of office space coming in the next year.
The Irvine Company made a strong bid to bring the law firm to 20-40 Pacifica, its twin towers being built in the Spectrum.
The developer went as far as to set up a meeting between the law firm and Irvine Co. Chairman Donald Bren, Hornak said.
“They made us a very competitive proposal,” he said.
Maguire, a real estate investment trust that is rumored to be up for sale, also went to great lengths to keep one of its biggest local tenants.
Chief Executive Rob Maguire took part in negotiations, which resulted in promises of upgrades to the 27-year-old building, Hornak said.
The building, part of a 785,000-square-foot complex owned by Maguire, is set to get a new lobby and landscaping as part of the lease renewal.
Rutan, which does corporate, litigation, real estate, government and other work, has been in the building since 1981.
The new deal adds about 12,000 square feet, or half a floor, to the firm’s space.
“We needed more space, either here or elsewhere,” Hornak said. “This seemed like the opportune time (to explore options), with the new high-rises.”
The firm has been growing its work force by about 6% annually for the past five years. Rutan has added a number of people in its real estate, litigation and mergers and acquisitions practices.
Clients include Irvine-based Quality Systems Inc., Los Angeles-based Northrop Grumman Corp. and Fresno’s Pacific Ethanol Inc.
Landing Rutan would have been a major win for the Irvine Co., validating Bren’s strategy to build towers in the Spectrum, which doesn’t count many big professional services firms among its tenants.
“If they had gotten (Rutan), it would have caused a major shift,” said Randall Parker, executive vice president and managing director of the Newport Beach-based office of Travers Realty, which represents tenants in leases. “It would have lent major credibility to the Spectrum. If the Spectrum is good enough for Rutan, then other professional services firms would have started looking there as well.”
Only one of the 20 largest law firms in OC (No. 13 on the Business Journal’s January list, Walsworth, Franklin, Bevins & McCall; in Orange) has headquarters outside Costa Mesa, Newport Beach or Irvine’s airport area.
During the 1990s, San Francisco’s Brobeck, Phleger & Harrison LLP opened an office in the Spectrum as part of its bid to go after technology companies. The office closed with the firm’s 2003 folding.
“For large law firms, the premier location remains to be South Coast Metro and Newport Center,” Hornak said.
The deal “speaks to the value of that location,” said William Flaherty, senior vice president of leasing and marketing for Maguire. “There are a few areas in the county that are urbanizing, and this is one of them.”
Law firms are among those likeliest to be able to afford the new high-rise office space being built in the county.
The Irvine Co. is marketing space at 20-40 Pacifica at monthly rates starting at $3.60 per square foot a month and as high as $4.30 per square foot. The county average for office space is $2.50.
“Interest in our new buildings is solid and from a wide variety of companies,” Irvine Co. spokesman Bill Rams said. “We feel very good about how we are positioned.”
Rutan is “an outstanding law firm,and reflective of the type of company that will be attracted to 20 and 40 Pacifica,” Rams said.
As a privately held company, The Irvine Co. could have more leeway in getting tenants, according to William Halford, chief executive of Newport Beach-based Bixby Land Co. and the former head of office operations for the Irvine Co.
“Maguire is public, there’s going to be more pressure to get tenants,” Halford said. “Bren is more likely to hold out for rates.”
James Travers, Parker and Steven Card of Travers Realty represented Rutan in the lease renewal. Maguire’s Peter Johnston, Stefan Khudic and Cori Caso represented their company.
