Santa Ana’s newest office building is full after landing a state-funded nonprofit to take up all of its space.
Regional Center of Orange County Inc., a nonprofit that provides services and support for people with developmental disabilities, signed a 10-year lease to move its headquarters and some local operations to 1525 N. Tustin Ave.
The group leased the entire building—about 80,000 square feet—at the four-story office, which opened late last year along the Costa Mesa (55) Freeway.
It’s one of the largest leases signed in OC this year that wasn’t a renewal of an existing lease.
The deal also is among the largest leases signed at one of the county’s recently built offices, which have struggled to land larger tenants amid the down real estate market.
Florham Park, N.J.-based Tustin Center Tower LLC put up the building. According to public records, the building is owned by a partnership of New York-based money manager BlackRock Inc. and Laguna Hills-based developer Muller Co.
The building is part of the Tustin Centre Tower complex, which also includes a 200,000-square-foot office building owned by BlackRock and Muller. The other building serves as the headquarters of real estate brokerage and investor Grubb & Ellis Co.
Along with Regional Center’s headquarters, the nonprofit plans to move its Santa Ana and Irvine offices to the site.
About 220 Regional Center employees in Santa Ana and Irvine are set to move to the building and are going to serve people who live in the eastern and central parts of the county. The move should happen by the end of November.
The nonprofit, which employs nearly 380 people across the county, also has offices in Orange and Westminster, which aren’t relocating.
Attractive lease rates made the move affordable for Regional Center, said Rick Sherburne, executive director for the Irvine office of brokerage Cushman & Wakefield Inc., who represented the tenant in the deal.
When the building near 17th Street and Tustin Avenue broke ground a few years ago, the developers were asking monthly rent of $3.25 per square foot. That was on par with rents being asked for at other new offices near John Wayne Airport and in the Irvine Spectrum
But that was before the effects of the slow market began pushing down rents across the county in earnest.
When the building opened in November, the landlord was listing monthly rents at $2.50 per square foot, about 50 cents higher than what older, existing offices in that part of the county were being marketed at.
“We couldn’t have made this (deal) a year and a half ago,” said Sherburne, who worked on the lease with Cushman’s Alex Hayden and Travis Boyd.
The landlord was represented by Oliver Fleener and Jon Swallow from the Newport Beach office of Grubb & Ellis.
The new office should be big enough to allow Regional Center to add more staff, if needed, over the life of the lease, Sherburne said.
Terms of the lease weren’t disclosed. Assuming a rate of $2.50 per square foot and initial free rent typical of leases signed of late, the 10-year deal would appear to have a value of roughly $20 million, or $2 million a year.
Regional Center paid about $1.9 million in rent last year for all four of its local offices, the agency said in its most recent financial statements.
Access to the freeway and public transportation and abundant parking, “combined with the lower cost, made this a prudent move for (Regional Center) as we work to gain as much value as possible from every dollar entrusted to us,” Executive Director Larry Landauer said.
The agency receives funding from the state of California and serves some 17,000 OC residents with developmental disabilities such as mental retardation, autism, epilepsy and cerebral palsy. It also provides help to families with developmentally disabled members.
Regional Center received about $196 million from the state for the12 months through June 30, 2009, according to its most recent financial statement.
The nonprofit’s lease appears to be the largest signed at a recently built OC office so far this year.
It edged out a 77,626-square-foot deal in Irvine signed earlier this year by Henkel North America, a maker of consumer and industrial products that’s part of Germany’s Henkel AG, for space at the Jamboree Business Center next to the Santa Ana (I-5) Freeway.
Both Regional Center’s and Henkel’s leases were for entire buildings.
