John Drachman

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ALISO VIEJO, CA—Quality office space is no longer anafterthought for many larger users, and they use their office spaceto create the sense that they want their employees to have thebest, Newport Beach, CA-based Stillwater Investment Group founder John Drachmantells GlobeSt.com. The firm, in a joint-venture partnershipwith CrossHarbor Capital Partners, recently acquired athree-building, 161,000-square-foot office campus at 26600,26650 and 26700 Aliso Viejo Pkwy. here for $36 million fromCavium Inc., which was represented by Byron Foss andGreg Tippin with Newmark Grubb Knight Frank.

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Built in 1999, the campus encompasses three, two-story buildingswith 2.5 acres of excess land. The site has been the corporateheadquarters for QLogic, a wholly owned subsidiary ofCavium Inc., a global leader and technology innovatorin high-performance server and storage networking connectivityproducts. On the heels of the acquisition of QLogic byCavium in August 2016, it was announced that QLogic would relocateits remaining Orange County operations to the IrvineSpectrum.

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We spoke with Drachman about the acquisition and thechallenges to marketing assets to larger users.

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GlobeSt.com: What stands out for you about the Aliso Viejooffice acquisition?

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Drachman: It was an exciting opportunity toacquire an office campus off market in a dynamicsubmarket. The campus is perfect for large corporate users whoare looking to take advantage of excellent amenities, efficientfloor plates, and a high-quality local labor pool.

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Aliso Viejo Office Campus

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GlobeSt.com: What are the challenges tomarketing/repositioning assets to larger users?

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Drachman: You have to make sure you acquireprojects that meet what the current demand is for officespace. Many larger users now require access to local amenitiesand great outdoor space as they look to attract and retain theirbest employees. Quality office space is no longer anafterthought for many larger users and they use their office spaceto create the sense that they want their employees to have thebest. You need to make sure you are acquiring assets that canprovide this to tenants, and then you to need to make sure youdeliver a strong brand to the tenant where they feel your projectis different than the rest of the competition. Larger users donot want commodity, generic product anymore.

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GlobeSt.com: What are the specific needs of larger officeusers of which owners should be aware?

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Drachman: Larger office users need to make suretheir space is efficient and easily accessible by theiremployees. They want spaces that offer outdoor areas to takeadvantage of the great climate in Southern California. Largerusers want great local access to a variety of amenities includingretail, hospitality and residential projects.

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GlobeSt.com: What else should our readers know about thisacquisition?

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Drachman: Our ownership group truly believes wehave bought a project that will check all the boxes for any largerusers in the marketplace. Our group will also continue to befocused on acquiring office projects like this in SouthernCalifornia where we can purchase projects below replacement costsand then drive tenant demand by creating a best-in-class officeexperience. We acquired this asset all cash in a short closingtime frame and can move just as quickly on future transactions.

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John Drachman

|

ALISO VIEJO, CA—Quality office space is no longer anafterthought for many larger users, and they use their office spaceto create the sense that they want their employees to have thebest, Newport Beach, CA-based Stillwater Investment Group founder John Drachmantells GlobeSt.com. The firm, in a joint-venture partnershipwith CrossHarbor Capital Partners, recently acquired athree-building, 161,000-square-foot office campus at 26600,26650 and 26700 Aliso Viejo Pkwy. here for $36 million fromCavium Inc., which was represented by Byron Foss andGreg Tippin with Newmark Grubb Knight Frank.

|

Built in 1999, the campus encompasses three, two-story buildingswith 2.5 acres of excess land. The site has been the corporateheadquarters for QLogic, a wholly owned subsidiary ofCavium Inc., a global leader and technology innovatorin high-performance server and storage networking connectivityproducts. On the heels of the acquisition of QLogic byCavium in August 2016, it was announced that QLogic would relocateits remaining Orange County operations to the IrvineSpectrum.

|

We spoke with Drachman about the acquisition and thechallenges to marketing assets to larger users.

|

GlobeSt.com: What stands out for you about the Aliso Viejooffice acquisition?

|

Drachman: It was an exciting opportunity toacquire an office campus off market in a dynamicsubmarket. The campus is perfect for large corporate users whoare looking to take advantage of excellent amenities, efficientfloor plates, and a high-quality local labor pool.

|

Aliso Viejo Office Campus

|

GlobeSt.com: What are the challenges tomarketing/repositioning assets to larger users?

|

Drachman: You have to make sure you acquireprojects that meet what the current demand is for officespace. Many larger users now require access to local amenitiesand great outdoor space as they look to attract and retain theirbest employees. Quality office space is no longer anafterthought for many larger users and they use their office spaceto create the sense that they want their employees to have thebest. You need to make sure you are acquiring assets that canprovide this to tenants, and then you to need to make sure youdeliver a strong brand to the tenant where they feel your projectis different than the rest of the competition. Larger users donot want commodity, generic product anymore.

|

GlobeSt.com: What are the specific needs of larger officeusers of which owners should be aware?

|

Drachman: Larger office users need to make suretheir space is efficient and easily accessible by theiremployees. They want spaces that offer outdoor areas to takeadvantage of the great climate in Southern California. Largerusers want great local access to a variety of amenities includingretail, hospitality and residential projects.

|

GlobeSt.com: What else should our readers know about thisacquisition?

|

Drachman: Our ownership group truly believes wehave bought a project that will check all the boxes for any largerusers in the marketplace. Our group will also continue to befocused on acquiring office projects like this in SouthernCalifornia where we can purchase projects below replacement costsand then drive tenant demand by creating a best-in-class officeexperience. We acquired this asset all cash in a short closingtime frame and can move just as quickly on future transactions.

|

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Carrie Rossenfeld

Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.

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