Dropping In at the Office : Developers of Pricey Buildings Turn to Helipads, Other Perks to Lure Tenants in the County’s Highly Competitive Market
Feeling oppressed by rush-hour traffic? You may want to look into one of Orange County’s newest corporate status symbols: a helicopter landing pad on the roof of your building.
The odds are good that yours will be the first one on the block, because so far, there are only 15 such rooftop landing pads in the county.
Half a dozen or so are used by local hospitals and police departments. Most of the rest belong to some of the county’s biggest companies: McDonnell Douglas, Hughes Aircraft and Rockwell International.
But a few of the “helistops” now perch atop the roofs of multi-tenant office buildings, another come-on to get companies to lease space inside.
The newest helistop, atop the Atrium in Irvine, shows the lengths to which developers will go to distinguish their building from the glass box containing offices next door, especially in the fiercely competitive market around John Wayne Airport.
Open for two years, the Atrium’s 336,000 square feet of office space is still less than 80% leased. That’s about par for buildings near the airport these days, according to commercial real estate brokers. But it doesn’t thrill the developers, Irvine’s French & McKenna Co.
“With so many competitors, picking a building becomes an emotional choice for a tenant,” said Peter L. French, one of the developers, adding:
“The helistop may be the thing that makes the decision for a tenant.”
Long a status symbol in big cities, corporate heliports are still something of a rarity in largely suburban Orange County.
The only other heliport atop a multi-tenant building is the one at First Interstate Bank building in downtown Santa Ana, which has been there since the building went up in 1963.
That one has been used mostly by out-of-town business people making a quick trip to the county Board of Supervisors, and occasionally by a visiting dignitary.
“It really hasn’t attracted any tenants,” said Eugene H. Moriarty, general manager for the Segerstrom family partnership that owns the seven-story building.
Back out at the airport, where phalanxes of steel and glass high-rises march into Irvine and Newport Beach, French & McKenna has already spent a lot of money trying to make its building stand out over the competition.
The two 10-story towers are separated by a tall glass atrium, there’s a chic restaurant and a fountain on the ground floor, and you can get a concierge to have your pants dry-cleaned. In such big and small ways do the county’s developers vie with each other for tenants.
But at bottom it is still the price that counts, say experts.
“Interestingly, the buildings that seem to do best have rents that are reasonable and are adequate buildings, but nothing special,” said Robert Dunham, president of the Newport Economics Group, a real estate consulting firm in Newport Beach.
That is true even in the airport area, which tends to attract a lot of blue-chip tenants but where there’s a staggering 4 million square feet of office space going up right now. And there are lots more finished office buildings that aren’t anywhere near fully leased.
Luckily, there are also a lot of tenants looking for space out there, or the office vacancy rate would be a lot higher than the 19% it has already reached, Dunham says.
As for the Atrium, it is grossing an average $2 a square foot in monthly rent, French & McKenna says, an amount which is also said to be about average for the airport area, even though the building offers above-average perks.
And like almost everyone else, the Atrium’s developers are giving tenants a month’s free rent for every year of the lease the tenant signs.
“It’s a good time to be a tenant,” said Dunham, the consultant.
Already lured inside are regional headquarters of General Electric Capital, Home Federal Savings and Loan, Manufacturers Life Insurance, stock brokers Merrill Lynch and the corporate headquarters of supermarket giant American Stores, which operates Alpha Beta and Lucky stores.
Still, it is doubtful that the helipad had much to do with those companies moving in. Strengthening the roof and adding handrails only added about $60,000 to the building’s cost, but some experts wonder whether the helipad was worth the two year’s of paper work to get approval from Irvine’s Planning Commission, Building Department and Fire Department, as well as the Federal Aviation Administration, Caltrans and even the county’s Airport Land-Use Commission. (Caltrans, incidentally, certified the helipad as structurally sound and free from obstructions in the helicopters’ flight path, two of the biggest concerns about the rooftop pads.)
Some real estate brokers also note that the building is only a few blocks from John Wayne Airport’s own helicopter landing pad.
French & McKenna concedes that few tenants will move in solely because of the helipad, but it says that the pad will help to sell the building indirectly by lending it a glossy cachet and grabbing attention.
And eventually, with traffic in the county getting worse each year, some building owners believe helicopters will become a common mode of transportation for executives.
“Traveling by car has become so unpredictable that if you have a meeting in Beverly Hills, you can either leave at dawn or call a helicopter and get there a few minutes later,” said Moriarty, general manager of the Segerstrom building.
“The deals are getting bigger, and people’s time is getting more expensive.”
