At first glance, Irvine’s attempt to woo Amazon for the e-commerce giant’s second headquarters carries about the same long odds as Larry Agran’s quixotic presidential bid in 1992.
Don’t discount the business savvy, enviable land holdings and financial muscle of the city’s main backer in the bid—the Irvine Co.—let alone the political clout of the Newport Beach-based master developer, which likely rivals, if not exceeds, that of the former Irvine mayor.
“Anything that gets our owner’s attention is important to us,” said Steve Case, Irvine Co. executive vice president, speaking last week of Donald Bren’s recent announcement that his company would be making a serious push to bring Amazon to Orange County’s third-largest and fastest-growing city.
Bren, Irvine Co. chairman and OC’s wealthiest person, made it known in a Sept. 8 statement that his firm would be working with the city to land Amazon for its so-called HQ2, a second office campus outside its Seattle headquarters that could hold upwards of 50,000 employees upon its ultimate build out.
“Our proposal will meet Amazon’s ambitious specifications and offer a promising and productive environment to nurture its long-term success,” Bren said in the statement.
The company also said it has tasked its former No. 2 executive, Dan Young, to lead the project.
Young, a former mayor of Santa Ana, stepped down as president of community development for Irvine Co. last year to run his own entitlement and development firm but remained an adviser to Bren.
The Irvine proposal will be submitted by the Oct. 19 deadline set by Amazon and “reflect collaboration with local government leaders, the University of California-Irvine, and business communities,” Young said.
When Amazon sees the city’s bid, “they’re going to find a very receptive business community,” Irvine Mayor Don Wagner said last week, speaking at the grand opening of Irvine Co.’s newest office tower, the 21-story 400 Spectrum Center building.
15-Year Plan
Amazon, which has a market value of about $475 billion and is the fifth-largest public company in the U.S., made shockwaves in the business world this month by saying it wanted to find a city to hold a second headquarters.
It employs more than 40,000 in Seattle and is among the city’s largest employers.
Amazon estimates the HQ2 project would cost more than $5 billion to build over a 15-year time frame and that the jobs it would bring to its chosen area—largely office positions, not warehouse jobs—would have average salaries topping $100,000.
There’s no shortage of cities much larger than Irvine—and much more willing to offer Amazon generous financial incentives—that are expected to take a stab at the proposal. There’s no shortage in speculation about the main contenders, either.
Denver, Atlanta, Boston, Washington, D.C., and Austin, Texas, have all been cited in national press reports as the most likely landing spots for the HQ2, many of which already have ties to Amazon.
West Coast cities in general are seen by many Amazon-watchers as being at a disadvantage to other locations, assuming the company would want to expand its geographical footprint from there.
It’s fair to say that Irvine hasn’t made most pundits’ short lists.
From a national perspective, “it’s something we’re fighting against, that we’re not just a suburb anymore,” said Dan Miller, senior vice president for Irvine Co. who heads entitlement work for the master developer.
The city’s already had an abundance of residential and commercial development over the past decade that rivals any city in the country. The Irvine Ranch, headed by Irvine Co., is now the country’s top location for new-home development.
Irvine was California’s 15th largest city as of last year, and now has about 267,000 residents. It’s also home to about 235,000 jobs and more than 26,000 businesses have a license here, according to city figures.
Having a large real estate firm backing the Irvine bid—two, in fact, if FivePoint Communities Inc. and its land at Irvine’s Great Park Neighborhoods joins in the city’s proposal—is likely to be a differentiator for the Amazon pitch.
Plenty of Space
Finding the office space to put Amazon wouldn’t be too much of a challenge, Irvine Co. officials said last week.
“We could do 5 million square feet (of office space) tomorrow” in the Irvine Spectrum area, Miller said last week.
While the 50,000-jobs figure given by Amazon for HQ2 has grabbed headlines, that’s a long-term estimate.
Initially, the company is looking for between 500,000 and 1 million square feet of office space by 2019, according to Amazon’s RFP on the proposal.
The new 400 Spectrum Center tower, by way of comparison, is 428,000 square feet.
The amount of space Amazon is initially looking for would likely be enough to hold between 3,000 and 5,000 employees, based on typical office layouts.
Amazon is estimated to employ about 900 in the Irvine area, many of those “good-paying jobs” consisting of the “tech-savvy” workers that the firm touts in its pitch to cities to house HQ2.
Its Appstore for Android was developed here. Amazon Studios bolstered its roster, buying video-game maker Double Helix here three years ago. The company runs some logistics for Amazon Prime’s same-day delivery from a facility near John Wayne Airport.
Irvine-based Conexant now supplies chips to make Amazon’s digital assistant Alexa work.
So there are already some Irvine roots.
Future stages of growth would likely be in the 1-million-square-foot range per phase, and could ultimately reach nearly 8 million square feet, according to the Amazon RFP.
Among prominent areas in the Irvine Spectrum not currently built or under construction, undeveloped land that Irvine Co. owns between the Quail Hill and Laguna Altura residential developments could hold about 1 million square feet of commercial space.
Irvine Co. owns about 7 million square feet of office space in the Spectrum area, Case said last week. Those buildings are about 97% leased, he said.
The Spectrum is the “economic engine for Orange County,” Case said at the opening of the 400 Spectrum Center tower, whose anchor tenant will be cybersecurity firm Cylance.
Irvine Co.’s companywide office portfolio tops 50 million square feet—the most of any office owner in the state—a majority of it in OC.
Initiative Rebut
If nothing else, Irvine Co.’s push for Amazon gives the area’s business community reassurance that the area’s dominant real estate firm isn’t planning to slow growth efforts in the region anytime soon.
This month, the Business Journal was first to report that a slow-growth initiative had been proposed for the city by some residents with a goal of getting the proposal on the November 2018 ballot. The proposal is expected to get its share of opposition from the area’s real estate and business communities.
Irvine Co. emphasized that Irvine is a “thriving and growing city” in its announcement of the forthcoming Amazon pitch, an idea backed by other city officials at last week’s office tower opening.
In terms of the recent construction, it’s “nothing but a positive,” Councilwoman and Mayor Pro Tem Lynn Schott said. “I’m for growth. I’m for progress.”
Last week’s opening of the 400 Spectrum Center tower—about a year following the opening of its sister 21-story tower at 200 Spectrum Center—comes about a decade after Irvine Co. opened a pair of office towers in the Spectrum area.
The 20 and 40 Pacifica properties opened at the onset of the Great Recession, with the Federal Deposit Insurance Corp. brought in as an unexpected anchor tenant for a time to manage, in part, the fallout from the area’s decimated mortgage industry.
National reports erroneously suggested at the time of the last recession “that Irvine would never recover,” Case recalled last week.
Now there’s a similar chorus shortchanging Irvine in its bid to bring Amazon here.
The FDIC isn’t an anchor tenant at 20 and 40 Pacifica anymore. Among the firms that have subsequently taken the regulator’s place as an anchor tenant: Amazon.
