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Saturday, Jan 28, 2023

Discount Retailer 99 Cents Moves HQ to OC

Tustin's Fight lands new base of tenants

A launch pad for some, a landing base for others; the Flight office campus is nearly fully occupied after a pair of notable companies inked deals to relocate their headquarters to the Tustin Legacy development.

After striking one of the larger new office leases seen in Orange County of late, 99 Cents Only Stores has moved its headquarters from Commerce to a 40,000-square-foot spot at the creative office campus.

The company is already working on the build-out of its new space, spanning the ground floors of two separate buildings at the campus along Barranca Parkway. The new headquarters includes space in the building that also houses some of the local operations of space tourism company Virgin Galactic Holdings Inc. (NYSE: SPCE).

In another headquarters win for Flight, Liberty Dental Plan of California will relocate its Irvine hub to a 40,000-square-foot space at the campus. A similar move was made in October by JustFoodforDogs, which plans to relocate its headquarters from Irvine to Flight in a 13,000-square-foot deal.

Near 95% Leased

Flight’s initial phase of development—an eight-building hub that runs about 470,000 square feet—is now about 95% leased, according to Parke Miller, executive vice president of Lincoln Property Co., the project’s developer.

“The overwhelmingly present theme of leasing is employers placing an emphasis on high-quality work/life and experiential office as a way to value their employees and create reasons for them to want to come into the office,” Miller told the Business Journal. “Along those lines, most of the leases we’ve signed are ASAP occupancy and really, really cool designed spaces.”

Other new tenants include architecture company WATG, which is relocating from its Spectrum Center base to Flight, and ART Furniture & Design.

In 2021 and 2022, Flight added 24 tenants totaling 373,000 square feet, for an average tenant size of about 15,000 square feet.

“The lease-up at Flight has been very diverse across all industries,” Miller said.

HQ Hub

The new space for 99 Cents is the first local office for the retailer, which initially offered all products at 99 cents or less when it was founded in the 1980s. The discount chain counts more than 50 retail locations in Orange County and nearly 400 companywide across California, Texas, Arizona and Nevada.

The headquarters relocation comes after a 2019 recapitalization for the firm, which included a $34 million cash infusion by partial owner Ares Management and other institutional investors. Ares and the Canada Pension Plan Investment Board acquired 99 Cents in 2012.

In 2020, 99 Cents named former Cost Plus Chief Executive Barry Feld to head the company as CEO.

Its new Tustin office will serve as a corporate base for about 200 employees, sources indicate, including the executive team, human resources, administrative and sales divisions.

Liberty Dental Plan of California, meanwhile, is headed by Amir Neshat, a dentist himself who founded the company in 2001 and serves as president and chief executive. Neshat is marking a residential expansion alongside the commercial one (see story, page 3).

Other companies that count Flight as their headquarters include Virgin Galactic, which recently inked a lease to expand its headquarters by 33,755 square feet, bringing its total footprint there to 110,226 square feet and solidifying its position as the campus’ largest tenant.

Virgin Galactic moved its headquarters designation from New Mexico to the Tustin office campus in March.

Flight has a couple additional deals nearing completion that’s expected to bring occupancy to 97%, officials indicate.

Sources tell the Business Journal that a large healthcare REIT represents one such deal, with a lease in the works spanning 13,000 square feet.

Tenant Demand

As the pandemic fades further into the rearview mirror for employers, local companies are still attempting to bring employees back into the office in the midst of a tight labor market.

“At Flight, we aren’t seeing significant changes in density, and spaces look very similar to the ones in 2019, but the difference now is it is all about the office experience, with tenants using real estate to define their brand,” Miller said. “A majority of tenants really want their employees back in the office.”

As such, employers are moving quickly through the construction process for their new spaces, with Flight expecting nearly all tenants to be moved in by the middle of next year.

With Flight virtually leased out, Miller is preparing for a new wave of construction phases that will push the campus footprint past the 1 million-square-foot mark.

Sources indicate Flight’s second phase—previously expected to run some 500,000 square feet on a speculative basis—may now be built to suit, following significant tenant interest for large blocks of space.


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