MOORPARK, CA-A short-term lease has led to a long-term deal for a manufacturing company that was considering a move to Mexico but will now remain in the US, according to principals of Lee & Associates-LA North/Ventura Inc. Lee principals John Ochoa and Grant Harris report that AG Machining Inc. has signed a seven-year lease for 111,700 square feet in an expansion of its operations to 609 Science Dr. Ochoa and Harris represented AG Machining in the lease with building owner 609 Science Drive LLC which was represented by Colliers International’s Team DeGrinis of executive vice president John DeGrinis, associate vice president Patrick DuRoss and associate Jeff Abraham.

The Lee principals explain that AG Machining, a full service metal fabrication company, has been operating in Ventura County for 25 years, but at the urging of one of its distribution companies, began exploring a move to the Otay Mesa region of Mexico, just east of Tijuana. “Our idea was to relocate, realize substantial savings on labor costs and pass some of those savings on to our distributors,” said Angel Garcia, AG Machining president. “But we didn’t anticipate how long the process would take, and meanwhile, we needed to keep our business moving forward.”

Even as negotiations in Mexico were continuing, AG Machining was outgrowing its warehouse space, so Ochoa approached DuRoss to explore the possibility of taking space at 609 Science Dr. on a temporary basis. But Ochoa also knew that, given the right terms, the building could also become a more permanent home for the company. “There were some specific deal points that we needed—early possession to set up the operation, free rent and an option to purchase—in order to effectively compete with the options AG Machining was exploring in Mexico,” said Ochoa. “Patrick really listened to us.”

The 609 Science Dr. landlord had owned the building for many years, and his cost basis for the building was low, giving DuRoss some flexibility in negotiations. Initially, AG Machining signed a month-to-month lease for 20,000 square feet. “A lot of landlords would not have been willing to offer a month-to-month 20,000-square-foot lease on a building of this size,” DuRoss said. “But we were confident that once the tenant got into the building, the benefits of staying there would become clear.”

AG Machining was founded in Moorpark, where its owner lives, but through the years its expansion needs took it to several different facilities in Simi Valley. The opportunity to consolidate its three facilities under one roof back where its president lived, along with the quality of the building and the terms of the deal, proved to be a better solution than a move to Mexico.

“We knew we needed to come in with a creative deal structure that specifically addressed AG Machining’s short-term needs and long-term goals,” DeGrinis said. “At the same time, we had a great building with that was exceptionally well-suited to this tenant.”

Garcia had explored buying a building for his business several years ago when prices were skyrocketing, and was still interested in acquiring a property. The option to purchase combined with the other lease terms convinced him to withdraw the proposals on the properties in Mexico in favor of the new building in Moorpark.

“This new lease offers us a lot of cost savings without having to uproot our business and lose our US presence,” Garcia said. “It also gives us an ownership opportunity, which was important to us, and what better place to own prime real estate than in the USA? We couldn’t have hoped for a better solution.”

Said Ochoa: “We often bring companies into Ventura County from other parts of Southern California, but it’s not often that we have the opportunity to help a company remain in the US. This was a win for my client, the landlord, Ventura County and the city of Moorpark.”