Five Point Gateway, the largest and most expensive office complex built in Orange County in over a decade, is largely finished and open to tenants.
But the nearly 1-million-square-foot campus on the edge of the Irvine Spectrum is still very much a work in progress.
“We have little bit of leasing to do,” said Carol Trapani, senior vice president for the Newport Beach office of brokerage CBRE Group Inc. who along with colleague Gregg Haly has the listing for the massive property, which the Business Journal toured last week.
It’s the second-biggest office project to open in California over the past few months after Apple Inc.’s 2.8 million-square-foot “spaceship campus” in Cupertino.
Top Deals
The four-building site on 73 acres at the edge of the former El Toro Marine base now serves as the local hub of chipmaker Broadcom Ltd., which moved its Irvine operations to the site late last year and occupies the two L-shaped buildings there.
The buildings, totaling 661,000 square feet, include labs and standard office spaces.
Miami-based homebuilder Lennar Corp. will occupy an additional 90,000 square feet at another building this year as it shifts its Western U.S. business hub from Aliso Viejo to Irvine.
Developer Five Point Holdings Inc., which formed a venture last year to buy back the office campus, will occupy 44,000 square feet for its headquarters, which will also relocate from Aliso Viejo.
That leaves available about another 230,000 square feet—a four-story building at 15161 Alton Parkway, plus the bottom floor of the similarly sized 15131 Alton. It’s one of the largest blocks of empty space in OC’s increasingly tight office market, where class A office vacancy rates are approaching 10%, not counting recently built offices like Five Point Gateway that are in the process of being leased.
Five Point Gateway checks the boxes on a number of largest commercial real estate-related lists, several of which are in this week’s Top Deals special report, which starts on page 15.
Five Point’s $443 million acquisition of the campus in August from Broadcom, done in a venture with Boston-based Rockpoint Group LLC and Starwood Capital Group of Greenwich, Conn., was the top office sale of the year, and of several years running.
The deal worked out to about $430 per square foot, one of the priciest large-scale commercial property deals ever seen in the area outside of Newport Beach.
Broadcom’s leaseback of two buildings, meanwhile, was the biggest office lease of the year by a wide margin. Lennar’s deal was the year’s seventh-biggest office lease.
$4+ Asking Rents
Broadcom is paying about $1.4 million a month for the first year of its lease, or $2.18 per square foot, triple-net. The tech company is responsible for paying utilities, taxes and other property costs.
By the end of its 20-year leaseback, it’ll pay nearly $3.50 per square foot, according to its latest annual report.
Five Point is trying to get rents of about $4.15 per square foot, full-service gross, for the remaining vacant space at the complex, according to Trapani. That’s a bit below what Irvine Co. is asking at its two new high-rises about a mile away in the Spectrum, she said.
The tight Spectrum office market—“it’s really become the Main and Main of Orange County”—warrants the relatively high rents, Trapani said.
High rents aren’t scaring off tenants. Trapani said a variety of technology, apparel, finance and medical-related firms have taken an interest in the space, which CBRE wants to lease to a single tenant.
Each building was constructed to Broadcom’s high-tech specifications. When it announced plans for the property nearly four years ago, it planned to occupy the whole campus and add phases later.
The chipmaker switched course after its early 2016 sale to Avago Technologies Inc. for $37 billion. Avago kept the Broadcom name but shifted its U.S. headquarters to Silicon Valley.
A multitenant office complex will result in additional changes, said officials with CBRE, whose brokers also worked on last year’s campus sale from Broadcom to Five Point.
Broadcom has an on-site gym, conference rooms, cafeteria and outdoor volleyball courts, all of which can only be used by its roughly 2,000 local employees.
Five Point plans to add a few features for the other tenants in coming months, including food and fitness options. Outdoor amenity space on the campus’ northern edge is also being considered, Haly said. Tweaks to the parking areas of the campus, which now consist solely of expansive surface lots, could accommodate a tenant in need of needing additional spaces, he said.
Five Point is also considering a shuttle service for campus employees who take the train to work. Irvine’s train station is about a five-minute walk away. Broadcom has indicated that nearly 10% of its Irvine employees take the train to work, Trapani said.
The campus is intersected by Marine Way, which runs underneath the site, and will eventually connect to Orange County Great Park and Five Point’s numerous area projects.
A six-mile wildlife corridor that will be formally dedicated this week at Great Park is close to campus, as is Five Point’s preferred location for a new military veterans cemetery.
