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Anduril Goes Big With Costa Mesa HQ

Anduril Industries Inc., Palmer Luckey’s tech-focused defense company, has set another mark in its rapid ascent among Orange County businesses.
The latest achievement is real estate related: Anduril, formed in 2017, is set to become one of the county’s largest office tenants after striking a massive deal to move its headquarters to the former site of the LA Times printing facility in Costa Mesa.
The deal, announced last week, is for 640,000 square feet at The Press, an under-construction creative office project that’s being built in phases over the next two years.
Brokers involved in the deal indicate the transaction, for the entirety of the office space expected to be built at The Press, is among the largest office leases ever made in Southern California, let alone OC.
It represents a striking sign of ambition for upstart Anduril, whose valuation is already approaching $2 billion, following a $200 million Series C fund raise last year and a series of big government contract wins.
It currently occupies about 100,000 square feet of space in its existing headquarters in Irvine. It also leases a newly-built, 72,000-square-foot industrial building in Santa Ana at Shea Business Center.
More’s in store, says the 28-year-old Luckey, who made his first fortune as the founder of Irvine’s Oculus VR, which was sold for about $3 billion in 2014 to Facebook.
“I love OC,” Luckey told the Business Journal.
“Anduril is leading the charge to turn this county into the defense technology hub of America,” he said.

Office Boost
The deal’s a huge boost to the region’s office sector. New leases have been slow to come by as businesses assess their operational needs post-pandemic.
“This is an incredibly exciting deal for Orange County, especially as office deals have been challenged in the wake of COVID-19,” said George Thomson, a senior managing director at Newmark who along with colleague Jay Nugent brokered the lease on behalf of the landlord, a joint venture between Foster City-based SteelWave LLC and Dallas-based Invesco Real Estate.
Anduril was represented by Tucker Hughes from Hughes Marino, who declined to comment on specifics of the transaction.
The deal will make Anduril Orange County’s second largest office tenant, trailing only Blizzard Entertainment, which occupies about 740,000 square feet in and around its home base in the Irvine Spectrum, regulatory filings indicate.
Chipmaker Broadcom’s Irvine office also approaches 640,000 square feet, however that firm has been subleasing portions of its space at the FivePoint Gateway campus after contracting its local operations in recent years.

2,000+ Workers
The new Costa Mesa headquarters is designed to accommodate current and future growth for Anduril, which currently employs about 400 employees, including north of 300 in Orange County.
That figure is expected to hit 700 by the end of the year and surpass 1,000 the following year with no signs of slowdown; the new location is expected to ultimately hold about 2,500 employees.
At that figure, Anduril would be among the top five largest aerospace and defense contractors in the county by worker count, according to Business Journal research.
Luckey noted last week that even at around 640,000 square feet, his firm’s physical presence was “only 1/6 the size of the Pentagon.”

Food Hall Scrapped 
Anduril’s lease includes 450,000 square feet of office space now being built across the street from the city’s Ikea, as well as a newly planned 190,000-square-foot research and development facility that has yet to start construction.
That custom-built facility “will be equipped with machine shops, labs, welding areas, high-power testing and more,” Anduril Chief Operating Officer Matt Grimm said in an online post last week.
The Press’ development duo acquired the 24-acre former printing facility off Sunflower Avenue, near Harbor Boulevard and the San Diego (405) Freeway, in 2018 for $65 million; construction kicked off in 2019.  
Plans have evolved for the development since the 2018 sale, and continue to do so with the single-tenant plan now in store.
The Press initially called for an approximately 400,000-square-foot office and retail project that included a 51,000-square-foot “Market Hall,” a restaurant and retail center led by Shaheen Sadeghi, the founder of Costa Mesa’s LAB Holding LLC.
The planned food hall has been scrapped due to Anduril’s space needs; new amenities at the site include smaller food and beverage sites and an 11,000-square-foot fitness center.
It’s not known whether Anduril would sublease any space at The Press as it ramps up its operations at the Costa Mesa campus, as it has in Irvine.

Phased Move In 
At one point, brokers at Newmark were in talks with other national technology and media companies including some in the so-called FANG sector, or Facebook, Amazon, Netflix and Google.
The Press was expected to hold several smaller tenants rather than a single user, until Anduril came along toward the end of 2020.
“We had a number of smaller requirements from large technology companies, until we were asked if we could scale up the property,” Newmark’s Thomson said. “All of us put our heads down and worked through the holidays to get this deal done.”
Anduril will move into The Press in phases over the next two years as construction wraps, with the company currently designing tenant-improvement plans for the first 146,000-square-foot office portion that’s expected to deliver in the next few months.
It will then ramp up hiring and moving efforts, eventually moving into the final phase with the new 190,000-square-foot research and development building, at which point Anduril is expected to vacate its current Irvine headquarters at 2722 Michelson.
“This is a fantastic and unique low-rise campus that not only provides scale for Anduril, it will allow the company to attract and retain the type of talent they’re looking to hire,” Thomson said.

Contract Wins
Anduril provides a variety of hardware and software products to the military and defense sectors.
It uses a combination of radar sensor-clad surveillance towers, drones and artificial intelligence centered around its core Lattice system to monitor large land areas.
The company’s technology works “from Day One,” it says. “We deploy in hours, not years. Our partners start receiving actionable intelligence within minutes of activation.”
Much of its development and testing can’t be done via remote working, so a large physical location is necessary for Anduril’s operations.
Anduril “sits in a unique intersection between technology and defense and while we have a robust software development team, we also have research and development, flight test engineers, and hardware engineers who need access to materials, workshops and testing environments that aren’t available remotely,” COO Grimm said.
Largely driving Anduril’s need for new space are new and notable defense and border-security contracts awarded to the firm.
The company took on two large contract deals last year, most recently securing one worth up to $950 million with the Air Force in September to develop a sensor-based system across all branches of the military.
A few months prior, the Department of Homeland Security awarded Anduril a $250 million contract to expand its “virtual wall” pilot program.
In the five-year agreement, Anduril’s solar-powered mobile surveillance towers will be used to detect moving objects and send location data to the cellphones of U.S. patrol agents. 

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