Irvine-based restaurant operator Yard House USA Inc. has doubled its local office space in a move to a high-profile Irvine Spectrum building.
Yard House has leased 24,600 square feet of space at 7700 Irvine Center Drive and is consolidating five other Irvine offices there. The building, alongside the San Diego (I-405) Freeway, has been known as Orange Coun-ty’s Chrysler building since it houses local operations of Chrysler Group LLC, which once took up more than half of the building.
The automaker has been retrenching space in the past few years and now occupies one floor in the nine-story office.
Yard House is the second restaurant operator this year to take up Irvine Spectrum space once held by an automaker.
Earlier this year, Irvine-based Taco Bell Corp. moved into One Premier Place, the former West Coast headquarters for Ford Motor Co.
The site was built in 2001 to serve as the U.S. headquarters for Ford’s Lincoln Mercury and its Premier Automotive Group of European brands.
In the past decade, Ford moved or sold off the bulk of its Irvine operations, leaving behind a small design studio.
Taco Bell, part of Louisville, Ky.-based Yum Brands Inc., signed a 10-year lease in 2008 for about two-thirds of the 300,000-square-foot building, which Ford still owns.
Growth vs. Contraction
A similar scene has played out with Chrysler and Yard House.
Since 2008, the automaker has cut its local operations by half, to about 60 workers. Chrysler declared bankruptcy in 2009 and re-emerged in April.
Yard House, which had been in about 14,000 square feet of space in five buildings, is set to have its name go up on the building that used to bear Chrysler’s sign.
“It’s a sign of the times when car monikers are coming down and you have food icons going up in their place,” said Steele Platt, founder and chairman of Yard House.
The building is owned by Irvine-based American Spectrum Realty Inc. and is about 72% full. Tenants include Irvine’s Galardi Group Inc., the holding company that operates hot dog chain Wienerschnitzel, and what’s left of Chrysler’s West Coast operations.
Yard House is expected to employ about 90 workers at the building, according to Platt.
Terms of the lease weren’t disclosed.
“We secured a really good, long-term lease,” Platt said. “I’m actually paying less money for twice the space.”
The lease is another sign of companies taking advantage of a tenant’s market for office space, where the county’s availability rate—made up of empty space, space available for sublease and occupied space that’s set to be vacated—is about 25%.
Yard House, which runs 27 restaurants in California, Arizona and other states, is one of a few restaurant chains to see growth during the downturn.
Last year, Yard House saw revenue rise 9% to $183.2 million as it opened restaurants.
This year, the company expects to open two more Yard Houses, one in Flor- ida in September and another in Denver in November.
The Denver Yard House is a quarter of a mile from Platt’s first restaurant, the Boiler Room.
In May, Yard House opened a restaurant at Red Rock Casino, Resort & Spa in Las Vegas.
The Las Vegas restaurant “came out of the gate doing amazing numbers and now is our second busiest store out of 27,” Platt said.
Yard House plans to add five to six restaurants next year, including one near Fenway Park in Boston.
The company targets developments with stores, offices, hotels and homes that see a lot of business during lunch and dinner.
Sales at existing restaurants have held steady and grown in some spots during the downturn, according to Platt.
“We have been very consistent and reacted appropriately to the downturn with the economy,” he said.
The company opened its first Yard House in Long Beach in 1996. The chain offers a big selection of draft beer and American food. The Yard House name comes from the signature 3-foot tall glasses the chain uses to serve beer.
Yard House sold a 70% stake to San Francisco-based private equity firm TSG Consumer Partners in 2007. Platt remained in control after the sale.
“We’re coming up to our third anniversary in about a month (with TSG),” Platt said. “We still have all the original people who helped me start Yard House in 1996. The (private equity firm) hasn’t put anyone new in.”
