ORANGE COUNTY AT WORK: CAREERS, COMPANIES, CORPORATE LIFE : OPENING OF A FRONTIER : Industrial Centers Entice Firms to the South County

Five years ago, Rick Mumma’s daily commute between his house in south Orange County’s Nellie Gail Ranch and his Newport Beach office took 25 minutes each way. Gradually the 17-mile trip lengthened to 45 minutes.

So Mumma decided to move his company, Plant Research Laboratories, to Pacific Business Park, a 900-acre center that is breaking ground in the south Orange County community of Aliso Viejo.

Plant Research Laboratories is just one of an increasing number of companies migrating from Newport Beach and parts of central and northern Orange County to the industrial parks and business centers rising up on former ranchland south of the Costa Mesa Freeway.

It was only a few years ago that analysts were ominously predicting that Orange County firms would abandon the county in large numbers and go to San Diego County or to the Riverside and San Bernardino “Inland Empire” and escape Orange County’s high housing prices.

But today, real estate experts predict that the development of the south county from a business outpost to a more sophisticated, urban environment is just a matter of time.

Affordable Housing

The opening of south Orange County as a new business frontier has been spurred by the construction of more affordable housing, the availability of large and attractively priced building sites and worsening traffic congestion for commuters headed to work northbound on the San Diego and Santa Ana freeways or the Pacific Coast Highway.

The 20-year-old industrial complex near John Wayne Airport has been converting to high-rise office buildings, causing land and rental rates to soar and chasing manufacturing firms south as they sell their valuable airport properties and reinvest in cheaper land.

Firms leaving the airport area are being welcomed into large, master-planned business centers, starting with the Irvine Co.’s Spectrum, a 2,200-acre industrial park at the intersection of the Santa Ana and San Diego freeways and close to UC Irvine.

“Most originally went down to the Spectrum because the prices were much less than in the airport (environs),” said Jerrold R. Cole, associate vice president of Coldwell Banker, a major commercial brokerage firm.

For example, Cole said, 2 1/2 years ago Parker Hannifin Corp. bought 60 acres in the Spectrum for about $6 a square foot and left the airport area, where the land was priced at more than $20 a square foot because it was being marketed for office buildings.

Bob Rau, president of the aerospace group of Parker Hannifin, said the company “had to grow and we were landlocked,” surrounded by hotels and high-rise office complexes near the John Wayne Airport. Land the company owns in the airport area has become “so valuable it doesn’t make sense to keep a single-story manufacturing building on it, he said.”

Moved in 1986

Rau said Parker Hannifin’s 1,000-employee division, which designs and manufactures aircraft flight-control systems, moved to the Spectrum in 1986. Other Parker Hannifin divisions still operating in Irvine, and employing another 2,000 people, eventually will follow.

While the Spectrum--already containing 340 firms and 13,100 workers--is at the leading edge of south county’s business development, other south Orange County parks are not far behind.

They include Pacific Park in Aliso Viejo, the 30-acre Saddleback Technology Park and 76-acre High Park in Mission Viejo, 400-acre Rancho Santa Margarita Business Park and 244-acre Rancho San Clemente Business Park.

And over the next five years, industrial development is expected to begin on another 2,000 acres in northern El Toro, where home building is legally prohibited because of jet noise generated at the nearby Marine Corps Air Station.

Unlike earlier south county real estate development that spawned mostly well-to-do bedroom neighborhoods, master-planned communities now appearing in the south county are making a serious effort to provide employment close to new housing. Developers are seeking a balance of housing and employment at the encouragement of county government, which is concerned about the continued overburdening of freeways.

“Our projection is that we will balance workers with residents by the year 2000 south of the (the Costa Mesa Freeway),” said Bryan Speegle, the county’s manager of advanced planning. By then, he said, there will be 517,000 workers and 332,000 dwellings in the south county.

Orange County firms are complaining much less about the county’s high housing prices since mortgage rates dropped, and such large south county developers as the Irvine Co. and Santa Margarita Co. have made a concerted effort to build less expensive houses and apartments, said Kenton Boettcher, vice president of Newport Economics, a real estate research firm.

Boettcher noted that currently about 80% of all new housing sales are to the south of the Costa Mesa Freeway and 60% are south of Lake Forest.

He said that although south Orange County seemed like a distant place to operate a business only a few years ago, the area near the Spectrum will be the county’s business and residential hub within 10 years.

In addition to attracting young professionals and skilled technicians, the new south county developments are luring corporate executives. Cole, of Coldwell Banker, said that “in the last three to four years we have seen a huge number of the executives buy homes down there,” moving their families from Irvine, Newport Beach, Tustin and Anaheim.

The south county has become particularly popular for high-technology research and development and for construction of buildings known as “build-to-suits,” which are custom-designed for specific needs. In 1986, of the 1.3 million square feet of research and development build-to-suits constructed in Orange County, nearly two-thirds were in the south county.

Dwayne Bazzett, vice president of administration for Toshiba America Industrial Electronics Business Sector, said that five years ago he might have had second thoughts about his current plan to move the company’s corporate headquarters from Tustin to the Irvine Spectrum and to add a plant in the new facility to manufacture medical diagnostic and telecommunications equipment.

Easier to Recruit

As part of the planned expansion, he said, the company will hire middle managers from across the nation. Five years ago prospective employees would have been appalled by the county’s high housing costs. But more recently, he said, recruiting has become easier because the south county now offers more affordable housing, as living costs continue to rise in other states.

Dan Curtis of Costa Mesa-based Curtis & Associates, a commercial broker that served as exclusive agent for Toshiba in its search for a new location, said south Orange County won out because of its abundance of affordable housing, proximity to services and “quality of life,” including closeness to the ocean and the quality of the air.

Similar reasoning will move Hughes Aircraft from Irvine to Rancho Santa Margarita Business Park in 1988. Dick Gunter, manager of Hughes’ microelectronics systems division, said “looking out 10 years we felt it would be a better place to grow and attract new employees.” Most important, he said, “it is possible for people to locate near where they work, and we are hopeful that it will happen.”

Although bargain building sites were once a major attraction at the Irvine Co.’s Spectrum, in the last few years land prices in that premium business park have risen. Now, more acreage is being sold for construction of buildings with larger amounts of office space that house research and development activities, rather than for warehouses and general manufacturing facilities.

Further spurring the development of the Spectrum as a high-tech center, is construction of a hospital in the park. The new facility is expected to attract more biomedical and pharmaceutical firms.

Jim Bell, vice president of marketing and sales for the Irvine Co.’s office and industrial subsidiary, said a survey of existing firms in the Spectrum shows that almost half are involved in high technology or research and development. He added that about 80% of the firms moving into the complex today fall into those categories.

Push to the South

Brokers say that in most cases manufacturing firms needing lower cost facilities with less office space are being pushed farther south to newer and more remote business parks in Santa Margarita, Aliso Viejo and San Clemente.

But even in these other south county centers, some real estate experts predict, there will be a tendency for light manufacturing plants and warehouses gradually to convert to research and office uses as land prices rise.

In recognition of the trend toward high tech, the Irvine Co., along with its joint venture building partners, is pioneering flexible buildings--structures that initially can be used for manufacturing but later can be converted to office use with the addition of mezzanines, windows and more parking.

James Doti, dean of the Chapman College School of Business and Management, said he is starting to call south Orange County “the test tube valley” because he believes it is “rather clear that the manufacturing development in the south county will be high tech.”

Businesses that need engineers, scientists and other highly skilled workers will gravitate to the south county, Doti predicted, while those that require larger numbers of assembly workers will go elsewhere. Even the lowest priced housing in Orange County is unaffordable to blue-collar workers needed on production lines, he said.

Speegle, the county’s manager of advanced planning, said that ultimately he expects the entire south county to “look rather like the airport complex,” with carefully manicured greenbelts and stringent development controls. “It will be a very desirable place for corporate offices,” he said.