The $34 billion-valued company (Nasdaq: CSGP) recently struck a lease to take up a full building at Spectrum Terrace, Irvine Co.’s collection of just-built mid-rise offices along the San Diego (405) Freeway.
The nearly 115,000-square-foot deal is more than three times the size of CoStar’s current local base of operations at the Park Place office campus a few miles away, near the intersection of Michelson Drive and Jamboree Road.
It’s the second-largest reported office lease in OC made so far this year, trailing Anduril’s record-breaking deal for The Press, a 640,000-square-foot office campus currently under construction in Costa Mesa.
Consolidation, Expansion
CoStar’s new lease is for 17600 Laguna Canyon Road, a 114,700-square-foot office part of Spectrum Terrace’s second phase.
The new space will replace CoStar’s current local hub at Park Place’s 3161 Michelson office tower, where it occupies some 37,600 square feet, including the entire 16th floor.
As CoStar continues to operate largely remote for the time being, it’s looking to sublease that space before it moves into its new digs by the end of the year.
CoStar also owns Irvine’s Ten-X, a platform for commercial real estate online auctions that occupies a roughly 21,000-square-foot building at 15295 Alton Parkway; CoStar said it isn’t yet looking to sublease that space.
It bought the commercial real estate division of Ten-X last year for about $190 million.
The full-building Spectrum Terrace lease starts June 1 and runs through late 2028.
New California Hub
CoStar’s future OC hub isn’t too far off in size from the company’s 169,100-square-foot national headquarters in Washington, D.C.
It’s not yet clear whether the new lease will serve as a new regional operation for CoStar, whose research efforts are currently based out of three locations, including one in San Diego.
The company has offices in Hendersonville, Tenn.; Boston, San Francisco, Ontario and Los Angeles, according to its latest annual report.
CoStar, which also has an international segment that’s based in London, specializes in providing commercial real estate information and analytics. It has several affiliates, including STR Research, LoopNet and Apartments.com, and averages north of 55 million unique monthly website visitors in total.
A local competitor is Irvine-based CoreLogic (NYSE: CLGX), which occupies 123,200 square feet as the anchor tenant at 40 Pacifica, a 314,300-square-foot office tower just across the freeway from Spectrum Terrace.
CoStar spent the early part of the year in a bidding war with Stone Point Capital and Insight Partners to buy CoreLogic, but around the start of March withdrew its $7.35 billion offer and said it was terminating acquisition discussions.
“With interest rates moving up, now is not the time for us to aggressively buy into the residential mortgage market,” CoStar Chief Executive Andrew Florance said at the time.
Stone Point and Insight Partner’s nearly $6 billion acquisition of CoreLogic is expected to be completed in a matter of months.
The new lease marks the latest full-building deal at Spectrum Terrace.
Other tenants to have signed full-building deals at the upscale office project include quant hedge fund TGS Management LLC and Alteryx Inc. (NYSE: AYX), the latter of which will occupy a building and a half totaling 183,000 square feet. Like CoStar, Alteryx is relocating from Park Place.
Coworking operator WeWork previously signed a full-building deal at Spectrum Terrace in 2019, but gave that space back a year later before moving in, as a result of internal struggles that were exacerbated by the pandemic.
A new deal for the 116,000-square-foot space that WeWork had planned to occupy at Spectrum Terrace is expected to be announced soon with a well-known tenant finalizing a deal there, sources indicate.
The first two phases of Spectrum Terrace are now nearly spoken for shortly after the second 345,000-square-foot phase of development wrapped in December, following the first phase’s debut in 2019.
The office complex will ultimately span about 1.1 million square feet, with a planned third phase to include three more mid-rise offices and other buildings.
