The new Silicon Valley-based owner of QLogic Corp. is moving the networking products maker’s local operations from Aliso Viejo to an office building under construction in the Irvine Spectrum.
San Jose-based Cavium Inc., which acquired QLogic this past August for nearly $1.4 billion, recently completed a deal to lease all of the space at a four-story office that Irvine Company is building on Sand Canyon Boulevard.
The lease at 15485 Sand Canyon Ave. is for 104,500 square feet and will start next summer when the speculative office is scheduled to be completed, according to the Newport Beach-based developer.
It’s the largest new office lease reported in Orange County in the past four months, according to brokerage data.
Cavium’s new location is one of two four-story buildings going up at the midrise Sand Canyon Business Center owned by Irvine Co.
The campus also holds five existing buildings that run 454,000 square feet total, some of which are leased to Verizon Wireless for a regional operations hub.
The new lease represents a decrease in local operations space for Cavium, a provider of semiconductor products with a $3.7 billion market valuation.
QLogic’s longtime headquarters is a three-building campus on Aliso Viejo Parkway that totals about 161,000 square feet, according to the company’s last annual report.
The buildings had held the product development, operations, sales and corporate offices of QLogic, which makes switches, adapter cards and other electronics used to speed up the flow of data. The company started operations in 1994 and was long one of the largest publicly traded technology companies based in Orange County.
Its three Aliso Viejo offices, which were built in 1999, went to Cavium when it acquired QLogic. Cavium’s quarterly report filed last month said that the buildings were listed for sale in September. Their appraised value is $38.5 million, or roughly $235 per square foot, according to its regulatory filings.
A potential buyer hasn’t been disclosed.
The “integration of QLogic has gone very well,” said Cavium Chief Financial Officer Arthur Chadwick on a call last month with analysts. “We’re on track towards integrating our business systems, operations, and facilities over the next few quarters.”
QLogic employed nearly 375 in Orange County through March, according to Business Journal research. It had 782 worldwide employees through mid-May.
In August, around the time Cavium’s acquisition was completed, QLogic announced it would cut 69 jobs at its Aliso Viejo location, or roughly 18% of its local workforce.
“A significant amount of hard work lies ahead of us in order to most effectively integrate QLogic into Cavium to maximize the opportunity and realize the synergies and benefits,” QLogic’s acting chief executive, Jean Hu, wrote to employees in an interoffice memo when the deal with Cavium was announced on June 15.
The deal between the two firms calls for annual cost savings of at least $45 million on combined yearly sales of about $1 billion.
Cavium employs about 1,000 at its San Jose headquarters and design hubs in California, Massachusetts, India and China.
QLogic is one of several notable local tech companies that have been acquired by out-of-town firms in about the past year. Others no longer based here include Irvine-based chipmaker Broadcom Ltd., laser maker Newport Corp., business software maker Kofax Ltd., circuit board maker Multi-Fineline Electronix Inc., and Costa Mesa-based networking gear maker and QLogic rival Emulex Corp.
‘NextGen’
Terms of Cavium’s new lease at the Sand Canyon Business Center weren’t immediately disclosed.
Space at the buildings was projected to go for monthly rents of about $2.90 per square foot, according to brokerage data from Colliers International earlier this year.
Cavium will join web-based automotive financing firm AutoGravity in Irvine at the two new offices.
The four-story buildings sport the same glass-clad look as Irvine Co.’s two 21-story towers in the Spectrum—one completed, the other under construction. The developer calls the building style ‘NextGen’ due to what it bills as tenant-friendly amenities and cutting-edge architecture.
Irvine Co. also is developing four similarly styled midrise offices about half a mile away at its 24-building Discovery Business Center campus next to the Santa Ana (5) Freeway.
AutoGravity will lease 40,000 square feet, making the two-building complex about 70% preleased.
“We are thrilled that Cavium chose our NextGen campus at Sand Canyon Business Center as the place that will help them continue to recruit and retain top talent while enjoying continued success,” said Steve Case, executive vice president for Irvine Co.’s office division, in a statement.
Cavium was represented in the new lease by Jeff Hoffman and Tracey Solari with Newmark Cornish & Carey and by Greg Tippin, Stacy Garcia and Byron Foss with Newmark Grubb Knight Frank.
