Home improvement retailer HomeBase in Fullerton plans to move its corporate headquarters to the former Irvine offices of Denny's Inc. in a $23-million deal--one of Orange County's largest new office leases in recent years.
HomeBase will occupy about 150,000 square feet at the Park Place office complex--the futuristic, mirrored corporate center at the San Diego Freeway and Jamboree Road that is also home to Fluor Corp. and Avco Financial Services. The 88-store home and building supply chain is scheduled to relocate its 475 employees to the site by the end of the year.
The lease, valued at more than $23 million over nearly 11 years, ranks among the county's largest, even when the market for commercial office space was booming, brokers said.
The overall rent to HomeBase, however, will be slightly below comparable Irvine rents--which average about $1.50 per square foot--because the lease is longer than normal and nearly two-thirds of HomeBase's space will be subleased.
"As we've enlarged our corporate team in order to support HomeBase's rapid chain-wide expansion, we have outgrown our current space," company president Bill Patterson said in a statement. HomeBase's 90,000-square-foot corporate offices have been located at 140 Orangefair Mall in Fullerton since 1985.
Brokers approached HomeBase only six weeks ago, when it became apparent that Thrifty Corp. would remain at its Los Angeles headquarters. After four months of negotiation, Thrifty was nearing the final stages of moving to the Irvine site at 3345 Michelson Drive.
"We had a final letter of intent executed with everyone but Thrifty," said Janine R. Padia, vice president of Winthrop Management in Irvine, a subsidiary of the Boston-based owner of Park Place, Winthrop Financial Associates. "We thought, 'Hmmm, what's going on here?' We then looked for another arrangement."
HomeBase would sublease about 97,000 square feet of its new space from Denny's, the national family restaurant chain, which closed its corporate headquarters in Irvine in 1991 and relocated the operations near its parent company, TW Services Inc. in Spartanburg, S.C. El Pollo Loco, also owned by TW Services, had remained in Irvine and still occupied about 20,000 square feet of that space, but will now move to another location within the Park Place complex.
Winthrop will directly lease an additional 53,000 square feet to HomeBase in space that became available when Reliance Insurance Co. reduced its operations and moved to a smaller area at Park Place last year.
HomeBase considered moving to several locations, and had been nearing a deal to move to an office building in Tustin that once housed MAI Systems Corp., a computer products firm that petitioned for Chapter 11 bankruptcy protection in April.
Brokers, however, lured them to the Irvine site at the last minute, according to Doug Pichard, senior associate at Marcus & Millichap's corporate real estate services division in Irvine, which represented the restaurant chain in finding a new tenant for its space.
"This was a very significant deal for Denny's," Pichard said. HomeBase "was ready to go to another project, but we were just real bullish."
A HomeBase spokeswoman would only say that they considered several sites before selecting the Park Place location.