Build-To-Suits Continue in Downturn

Despite rising vacancies in office markets around the country, which might suggest that ample space is available without the build-to-suits, market experts point out that available space does not always meet the specific needs of tenants, so build-to-suits keep going even in a weakening office market. Dave Desper of the Newport Beach office of CB Richard Ellis explains, for example, that Mitsubishi Materials is having the new 52,840-square-foot space built to suit in the Orange County city of Fountain Valley rather than renting an existing building because the company had very specific requirements for its new space and nothing that was on the market met its requirements. Desper, who represented Mitsubishi Materials along with senior vice president Chip Wright of CBRE's Newport Beach office, says that Mitsubishi expects to move in to its new quarters at Southpark Business Center in November in a relocation from 17401 Eastman St. in Irvine, where the company has rented space for about 10 years.

In the Urbana project, Banner Life is building a 115,000-square-foot build-to-suit headquarters at the Urbana Corporate Center, a $30-million-plus LEED certified project that will eventually house approximately 400 employees. It is being developed by a joint venture between Natelli Communities and Akridge, with groundbreaking scheduled for spring of 2010.

According to Tom Natelli, CEO of Natelli Communities, the Banner Life project is the second major development in it Urbana park. Fannie Mae has a data center of roughly 230,000 square feet already running in the park. Natelli has received approval for a total build-out of 1.2 million square feet of office and 600,000 square feet of retail.

The DeVry University project in Long Beach reflects a market trend that has developed along with the recession: Educational facilities, including trade and technical schools, are expanding to accommodate increasing enrollment as laid-off workers retrain for new jobs or go back to school to shore up their qualifications to be better prepared when hiring picks up again. DeVry has signed an 11-year lease with San Francisco-based Newcastle Partners and Rreef for its new 46,500-square-foot campus, which will be developed at the Newcastle/Reef Douglas Park office project.

The DeVry deal marks the largest office lease in the Long Beach Airport submarket since 2007 and the first tenant announced at Douglas Park, according to the developers. The 47,500-square-foot DeVry facility will be a class A office building that will be situated on 3.7 acres and will be designed for LEED Silver certification.Construction is expected to start in May and to be completed in March 2010.

The 32,980-square-foot project for the Department of Defense is a new Military Entrance Processing Station, which is responsible for qualifying and processing applicants for the US armed forces and federal service. The MEPS staiton will be situated on a 4.25-acre site at 1700 E. Grand Ave. It is slated to open in August 2009 and will be a relocation from 5051 Rodeo Rd in Los Angeles. Of the 65 MEPS centers located throughout the US, the Los Angeles facility is the largest.