Lake Forest’s Panasonic Avionics Corp. is one company local office landlords and developers will be keeping a close eye on in 2010.
The company, a maker of in-flight entertainment systems for airlines, is one of the largest tenants in Orange County that may be looking to move.
The company currently leases about 327,000 square feet of space—a combination of offices, test development space and labs—in six buildings that surround its local headquarters on Enterprise Way.
Panasonic Avionics employs about 1,200 people locally and 2,600 people in total.
The company’s looking to grow to as much as 425,000 square feet in the next few years, according to Keith Myers, who manages Panasonic Avionics’ global facilities and real estate efforts.
That expected level of growth could cause the company to move to new or existing buildings in the same area, or outside OC if the right opportunity comes along, he said.
“We’re looking at all our options,” Myers said.
A corporate relocation would be the largest seen in OC in several years.
A request for proposal recently was sent out to potential brokers to represent Panasonic Avionics—part of Japan’s Panasonic Corp.—as it looks at a variety of space options in the next few years.
The company expects to select a brokerage team by year’s end, according to Myers. A larger decision of whether to move would not likely happen until late 2010, at the earliest.
Panasonic Avionics has grown its Lake Forest operations in recent years by snapping up space that’s become available in several buildings near its headquarters.
A number of those buildings previously were used by Gateway Inc., now part of Taiwan’s Acer Inc.
All of Panasonic Avionics’ leases—including subleased spaced from Gateway—expire in the beginning of 2012.
Simple renewals for all the buildings could prove tricky, since the properties the company’s in are owned by a variety of landlords. Only one landlord, Irvine-based Bixby Land Co., owns more than one of the six buildings that Panasonic Avionics leases.
Panasonic Avionics isn’t opposed to remaining where it is, although upgrades likely would be needed at the buildings, most of which are more than 10 years old, according to Myers.
The company’s parent is pushing for all its subsidiaries to use more environmentally friendly, green buildings. That would require a lot of work at some of Panasonic Avionics’ existing buildings.
“It’s hard being green in a brown building,” Myers said.
From an operational standpoint, it would make sense for Panasonic Avionics to consolidate its local operations into one or two buildings at an existing campus, if the right space is available, according to brokers familiar with the company’s needs.
Options
There’s about 1.9 million square feet of office space in Lake Forest, and those buildings are about 87% full, according to Newport Beach-based Voit Real Estate Services. For all South County, including the nearby Irvine Spectrum area, there’s 20 million square feet of office space in total. South OC’s office market counts an occupancy rate close to 83%.
Myers said the company’s preference would be to remain within five miles of its current location. But it wouldn’t rule out a move to a more inexpensive location in the Inland Empire if the right opportunity came along, he said.
A build-to-suit project is a possibility, if a local developer were interested in taking on the project.
There’s only been one large build-to-suit office or industrial project to break ground in OC this year: the new headquarters and warehouse building for Anaheim-based grocer Northgate Gonzalez Market.
Panasonic Avionics officials said their expansion plans for space are warranted, based on a growing demand for their products, in addition to new products.
More than 3,000 planes are outfitted with Panasonic Avionics’ in-flight entertainment systems for watching movies, TV shows, shopping, playing games or making calls. Customers have included EgyptAir Holding Co., Qantas Airways Ltd., United Airlines and Delta Air Lines Inc.
