The motto for companies looking for space in Orange County last year?
Go big or go home.
Orange County tenants were all about the full-building leases in 2019, with buildings in Irvine in particular snagging much of that total leasing activity.
The top 10 office lease deals in OC last year exceeded 950,000 square feet, according to data in this week’s Top Deals (see this section) listing. The total is down 20% from 2018.
While quantity might have been down, quality appears to be up, as new developments grabbed a large share of the headline-making lease activity.
Spectrum Terrace, Irvine Co.’s under-
construction office complex just off the San Diego (405) Freeway, had a strong showing during its first year of business.
The company has two deals represented in this year’s list, spread across three buildings, while a third is also said to be completed.
Companies are willing to pay more for their space if it is new and creative, said Bob Thagard, executive managing director at the Irvine office of Cushman & Wakefield, while commodity projects are still “battling to try and earn occupancy.”
“Landlords are doing everything they can to keep tenants in their project,” Thagard said.
Many are investing in tenant improvements to retain and attract tenants, which has created upward pressure on rental rates, he said.
Spectrum’s Center
Irvine-based data analytics software maker Alteryx Inc. (NYSE: AYX) made the largest lease of 2019 when it struck a deal to more than double its local footprint with 183,000 square feet for two buildings at the first phase of the Spectrum Terrace midrise office development.
The landlord has put up $14 million, or $78 per square feet, in tenant improvements for the company’s build-out, according to regulatory filings.
Alteryx is slated to move into its new digs by the end of the year; the lease runs seven years.
“The Irvine Company shares our vision of making Orange County a tech hub that attracts talent, capital and jobs,” Alteryx CEO Dean Stoecker told the Business Journal last month, adding that the new location will “have all the latest technology and tools.”
The deal is for the entirety of 17200 Laguna Canyon Drive, and spills over into 17100 Laguna Canyon Drive, where it will take up part of the first floor and all of the third and fourth floors.
Another full-building lease at Spectrum Terrace also marked the largest local deal to date for New York City coworking company WeWork.
The 116,300-square-foot, full-building lease is still on schedule, Irvine Co. officials previously told the Business Journal, despite WeWork’s beleaguered 2019.
Details for another full-building lease at Spectrum Terrace are not reflected in this year’s ranking.
As the Business Journal first reported last month, TGS Management LLC, an under-the-radar quantitative finance hedge fund with headquarters in Irvine, recently inked a deal for the second phase of Spectrum Terrace, according to sources.
It’s slated to occupy the entirety of the under-construction office at 17500 Laguna Canyon Road, which will run about 115,000 square feet and is expected to be built by the end of the year.
It’s not yet known whether TGS would use the Spectrum Terrace building for its own operations, or if it has other plans for portions of the space.
Industrial Deals
It wasn’t just office tenants making big moves last year: all 10 of the top industrial leases were for full buildings.
Leasing volume for the industrial sector surged 70% to 4.6 million square feet in 2019, with Albertsons Cos.’ 20-year leaseback of its 1.2 million-square-foot Irvine distribution center tops.
Another deal also topped 1 million square feet.
Walnut-based Unis Co., a fulfillment and transportation provider, took up all of CenterPoint SoCal Logistics Center, a 1.1 million-square-foot industrial facility along Valley View Drive in Buena Park.
Amazon.com Inc.’s push into Orange County in 2019 included its deal for 515 E. Dyer, a recently renovated warehouse facility totaling 414,309 square feet, a few blocks from the Costa Mesa (55) Freeway and about 4 miles from John Wayne Airport.
The e-commerce giant placed a focus on OC last year, with a string of dealmaking starting in October that upped its local footprint to well north of 1 million square feet, far and away the single largest total of any area industrial tenant in the area over that period.
Prior to the recent flurry, Amazon occupied less than 450,000 square feet of industrial space in the county.
“Amazon’s activity was huge for Orange County last year,” said Clyde Stauff, senior executive vice president at Colliers International.
“The rise of e-commerce has driven strong and continued demand for last-mile distribution centers across the county.”
