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OC Business Journal: First Steps for ATEP

by Mark Mueller

Tustin Legacy is doubling down on office development, and now has an eye on education and job training for the region’s next generation of tech workers.

An education-focused business park is in the early construction stages on 55.8 acres on Red Hill Avenue on the northwestern edge of the 1,606-acre former Marine Corps Air Station.

Advanced Technology & Education Park is headed by the South Orange County Community College District, which took ownership of the land through a deal with the city of Tustin after the former helicopter base closed in 1999.

It’s one of 72 community college districts in the state and includes Saddleback College in Mission Viejo and Irvine Valley College in Irvine. The two schools serve more than 60,000 students a year and employ 3,000 faculty and staff. The district plans to operate the ATEP campus, under a public-private partnership with businesses and developers building and operating individual buildings that fit the school district’s vision for the project under a longterm ground lease.

It’s a “new model” for the region’s schools, according to interim chancellor Debra Fitzsimons.

Upwards of 1.7 million square feet of space could be built over the coming years if the campus remains purely education-focused. If more conventional office or industrial buildings are added—up to 49% of the campus could be those types of properties—the school district could build up to 1.1 million square feet.

Even at the smaller threshold, it would be one of the largest ground-up commercial developments in Orange County in years.

A little more than 60,000 square feet is already spoken for, thanks to the district’s two existing institutions.

Irvine Valley College is nearing completion of the first new facility there, a 32,492square-foot career technical education facility to include a one-story fabrication shop and lab wing, in addition to offices and other space. The $17.7 million project is scheduled to open early next year.

Also in the early development stages is Saddleback College’s 30,000-square-foot Center for Innovation and Healthcare Education, a regional simulated healthcare facility that will include a 300-person conference center.

Ambitious Goals

The school district seeks to sign deals for an additional 250,000 square feet at the campus over the next 12 to 18 months and wants its partners to start construction on part of it over that time, according to Fitzsimons.

The Irvine office of NAI Capital has the listing. The commercial brokerage has been in contact with a number of speculative developers interested in building medical office, research and development properties, and other product types, according to NAI Executive Vice President David Knowlton, who’s working on the project with colleagues Kirby Greenlee and Mariko Beaver.

Terms of the development agreement between the school district and prospective users will be “practical for both sides,” he said.

The district is looking for users willing to build projects 35,000 square feet and larger on at least two acres. Buildings can be as tall as six stories.

The ground lease will likely have terms starting at about $ 118,000 per acre, per year, though that fee is negotiable, depending on the use of the buildings, according to NAI Capital.

2nd on Block

The school district has already spent nearly $7 million on infrastructure for the campus, which is now rough-graded and development-ready, according to Fitzsimons.

The kick-off of work comes as early-stage groundwork is under way a few blocks south at Flight, a creative-office development that’s also part of Tustin Legacy.

A venture between the Irvine office of Dallas-based Lincoln Property Co. and Alcion Ventures of Boston is heading the speculative project near the intersection of Red Hill and Barranca Parkway.

Flight’s first phase will include eight offices and a stand-alone food hall and conference center that will total nearly 400,000 square feet. It broke ground this past summer.

Flight and the college-driven park will appeal to very different sets of users, so there shouldn’t be competition between the two developments, according to Knowlton.

At the education-focused campus, a variety of higher education institutions, R&D companies, high-tech manufacturing, medical-oriented firms and similar types of users are being targeted as potential occupants.

More traditional office facilities, including corporate headquarters, are also a possibility, as is housing for up to 500 students, according to NAI Capital officials.

District students would in theory be trained on-site through internships and other collaborative opportunities to work at the companies on the campus.

The goal is to create a model in which “educators and businesses collaborate on curriculum, equipment and common standards,” so that students are “immediately effective in the workplace,” Fitzsimons said.

Saddleback College’s new healthcare facility, for example, is slated to include a simulated hospital and emergency room for students. Off-site training for such facilities is a rarity, and on-site training very expensive; it can cost more than $1,000 a minute to shut down an active emergency room for training, according to Fitzsimons.

Foundation Set

The education business park has been more than a decade in the making. The school district initially got 66 acres on the former base from the city, but the configuration of the land was shaped like a “skeleton key,” and harder to develop, Fitzsimons said.

The last recession also kept the project on the back burner along with several other projects planned at Tustin Legacy.

A series of land exchanges that wrapped up about four years ago resulted in the current size and setup.

“All the hard work that needed to be done is done now. Now we have the foundation ready,” said Fitzsimons, who announced her retirement this month. She’s served in the interim position since last year, and was previously vice chancellor of business services.

A replacement isn’t expected to be named until next year.

Fitzsimons said she’ll stay on “in some way” to help shepherd the project.

“We’re seeing all the fun stuff move ahead now.”