Newport Beach-based chipmaker Mindspeed Technologies Inc. is staying put after all.
The maker of chips for routers, switches and other networking gear said that it signed a lease to remain at its current headquarters at least until the end of 2012. The new deal is for slightly less space than it occupies now.
The lease is for about 96,829 square feet at 4000 MacArthur Blvd., a two-building complex that’s served as Mindspeed’s headquarters since its inception.
Mindspeed has the option to extend its lease an additional five years, the company said in a filing with the Securities and Exchange Commission last month.
The company had been occupying space at the office through a sublease from fellow chipmaker Conexant Systems Inc., which spun off Mindspeed in 2003.
That sublease, for about 107,000 square feet of office space, was slated to end in June.
The impending end of the sublease, combined with a favorable market for Orange County tenants, had prompted plenty of speculation in real estate circles about Mindspeed’s next move.
In November, the Business Journal cited company officials talking about Mindspeed’s planned relocation to Aliso Viejo.
The company declined to disclose any additional details about a potential move at the time. Brokers later said that the company had struck a deal to lease 70,000 square feet at Aliso Viejo’s Summit Office Campus, just off the San Joaquin Hills (73) Toll Road.
Such a move would have been the most notable example of a business based near John Wayne Airport moving to Aliso Viejo since Valeant Pharmaceuticals International relocated from Costa Mesa in 2006.
Talk of an impending move appears to have stirred the owner of 4000 MacArthur, New York-based Tishman Speyer Properties LP, into action with an attractive, last-minute counter offer.
New Lease
Under terms of the new lease, the monthly rent for Mindspeed’s space runs $176,597, nearly a 20% drop from what it had been paying each month under its prior sublease, according to regulatory filings.
The new deal breaks out to a monthly rent of about $1.82 per square foot.
That’s well lower than the $2.26 per square foot monthly average asking rate for office space near John Wayne Airport, not to mention the $2.41 per square foot average rate for the best offices in that part of OC.
Other space at 4000 MacArthur is being offered at monthly rents of about $2.15 per square foot, according to data from CoStar Group Inc.
In addition, the lease calls for nearly $800,000 in rental abatements—essentially free rent—for the bulk of Mindspeed’s sublease payments to Conexant in 2010, according to regulatory filings.
Mindspeed’s also set to get another $968,290 payment from the landlord in a few months, to be used either for improvements to its offices or as a payment against rent.
In addition, if Mindspeed opts to renew its lease for another five years—triggering annual rent increases of 3%—Tishman is required to pay the company another $1.9 million as a renewal allowance.
The two 10-story offices at 4000 MacArth-ur are currently Tishman’s only OC properties, according to the company’s Web site. They show no sign of financial distress.
Tishman bought the buildings, which total 373,000 square feet, in 2006 for $135 million, or about $368 per square foot. KBS Realty Advisors LLC of Newport Beach sold the buildings, about a year after buying them for $110 million.
The lease looks likely to help boost the bottom line for Mindspeed, which has returned to profitability after a tough 2009.
The company last week reported net income of $3.1 million for the quarter ending April 2, matching what was expected and reversing a loss of $14.8 million a year earlier.
The company reported sales of $40.2 million for the quarter, up 53% from a year earlier, excluding year-ago revenue from patents that were sold.
