Boot Barn Holdings Inc. (NYSE: BOOT) has struck a deal to relocate its headquarters to the Irvine Co.’s Spectrum Terrace office campus, the Business Journal has learned.
The apparel company will be taking over a full building at the campus previously leased to by Alteryx Inc. (NYSE: AYX) and Kajabi LLC in separate sublease transactions.
The new deal totals roughly 116,000 square feet, a 37% increase from Boot Barn’s current base elsewhere in the city.
The office expansion comes amid ongoing growth for the western-focused apparel company, which last month posted fiscal first-quarter results that beat analysts’ estimates.
“As we continue to grow, our Store Support Center, based in Irvine, requires a larger space,” Boot Barn CEO Jim Conroy told the Business Journal, noting that in the company’s 45-year history, it has become the largest western and work wear retailer in the nation.
The deal marks a retrenchment for Irvine-based data analytics software maker Alteryx, which still occupies a full building at Spectrum Terrace, and for Irvine-based entrepreneur-focused software company Kajabi, whose 44,000-square-foot base at the campus is reported to be its only local office.
Next Year Move-In
Boot Barn is expected to move into its new base at 17100 Laguna Canyon Road in about a year after tenant improvements are completed.
The $2.6 billion-valued company currently occupies the entirety of 15345 Barranca Parkway, an 84,580-square-foot building at the Lakeview Business Center, also owned by Irvine Co.
Boot Barn’s lease for that space expires next August and does not include a renewal option.
Boot Barn’s Spectrum Terrace subleases run until March 2027, when both Kajabi and Alteryx’s lease terms end.
It’s not yet clear if Boot Barn intends to sign a direct lease with Irvine Co. to remain in the building after the subleases expire.
Sales, Store Growth
Boot Barn’s move to the bigger, more luxe office space—Spectrum Terrace amenities include a resort-style swimming pool, a food hall and upscale fitness facility—follows years of substantial growth, including a push to reach more affluent customers.
The company’s annual net sales have climbed 85% from $893 million in fiscal 2021 to $1.7 billion in fiscal 2023.
Its latest financial results—for fiscal first quarter 2024—topped the Zacks Consensus Estimate.
The company saw net sales jump 4.9% to $384 million from the year prior, for the quarter ended July 1.
“We are seeing healthy growth in customer count in our legacy stores, while also capturing a considerable number of new customers as the store portfolio builds across the country,” Boot Barn’s Conroy told analysts during a conference call last month.
“Some of our best-selling categories are [at] higher price points,” Conroy said more recently during Goldman Sachs’ 30th Annual Global Retailing Conference. “I know that flies in the face of what a lot of other folks [in the apparel industry] are calling out.”
The company added 16 stores in its first-fiscal quarter, bringing Boot Barn’s total location count to 361 across 44 states.
That’s up 16% from 311 the year prior, and a 31% jump from two years prior in fiscal 2022.
“Our new stores continue to pay back in fewer than 18 months with strong average unit volumes in the first year,” Conroy told analysts. “[We] remain confident in our ability to achieve our long-term stated goal of 900 or more stores across the U.S.”
The company counted about 8,800 employees as of April this year.
Job Cuts
Alteryx—OC’s most valuable publicly traded software company—in 2019 inked a deal to take 183,000 square feet at 17200 Laguna Canyon Drive and part of the first floor and all of the third and fourth floors at 17100 Laguna Canyon.
It never moved into the second building.
Last year, it unveiled its full building at Spectrum Terrace to entice employees to return to office.
Its space at the time housed about 350 of the company’s 2,000 full-time OC employees.
That number has since fallen after the $2.6 billion-valued firm earlier this year said it would cut 11% of its workforce.
Alteryx, however, is currently hiring. It says it has 23 job openings online, about a third of which are in Irvine. Some of those positions are “remote-friendly,” the company says.
The company last month was reported to be working with an investment bank to explore a possible sale.
Remote Positions
Kajabi in 2019 secured its spot at the campus, more than doubling the size of its local footprint from a 17,241-square-foot space at the nearby Sand Canyon Business Center to roughly 44,000 square feet at 17100 Laguna Canyon. It then had about 200 employees.
Kajabi in March said it reached a new milestone: $5 billion in sales generated by users of its software—up nearly 50% from the year prior.
Though the company has relinquished its space at Spectrum Terrace, “we’re looking to open another office in OC,” CEO Ahad Khan told the Business Journal.
The company plans on having a mix of remote and hybrid employees, he added.
OC’s Sublease Increase
Alteryx Inc. and Kajabi LLC are the latest notable examples of local firms shedding office space as office tenants reexamine their footprint amidst ongoing remote work trends fueled by the pandemic.
In June, Orange County had roughly 4.5 million square feet of sublet office space available locally, nearly twice the amount seen prior to COVID-19, according to data from Avison Young.
Current sublet space availability is at its highest point in more than a decade, up 88% from the end of 2019, and up from roughly 4.3 million at the end of last year.
OC’s office market runs over 90 million square feet, with almost 45 million square feet designated as higher-end, Class A space, according to data from Cushman & Wakefield.
Spectrum Terrace is part of the county’s Class A space. The Irvine Co.-owned campus has had success in signing full building deals for the campus since its delivery in 2019. Such tenants include Amazon, Apple, CoStar Group and TGS.
The area around John Wayne Airport remains OC’s largest office market, with nearly 40 million square feet of space, according to C&W’s data.
