Irvine Co. Puts Its Own Stamp on High-Tech Spectrum Business Park : Real Estate: The giant developer tried to break out of the Silicon Valley mold by encouraging more diversity. The results so far are mixed.

In 1984, developers were building 30 high-technology business parks in states stretching from Maine to California, frequently touting them as the “next Silicon Valley.”

When Irvine Co., the giant Orange County developer, unveiled plans that year for a 2,600-acre technology park to be called the Irvine Spectrum, company officials had something altogether different in mind.

Sure, Silicon Valley’s collection of technology companies had won the San Jose area international acclaim as the world’s computer-chip manufacturing Mecca. But that glittery image was tarnished when the semiconductor industry hit nasty slumps in the early and mid-1980s, bringing thousands of layoffs in the valley.

“We went after a more diverse mix of high-tech industries. We definitely did not try to become another Silicon Valley,” recalls Richard G. Sim, president of Irvine Co.’s investment properties group. “Silicon Valley is a one-industry town, and that is its disadvantage.”

Long known for its defense contractors and Disneyland, Orange County is gaining recognition as a technology center as well, albeit one that is uniquely Southern Californian. The Spectrum itself could be likened to a glitzy shopping mall, where high-tech companies set up shop as much to sell their names as their products.

“I think the Disneyland image is long gone,” said Roger W. Johnson, chairman of Western Digital Corp., a computer components manufacturer and the biggest employer in the Spectrum. “I think this area will also be known as a broader-based technology center.”

While Silicon Valley is focused on microchips and computers, the Spectrum has a diverse mix of computer, biomedical and biotechnology companies--and even an aerospace company or two. Just half-completed, the Spectrum has become Southern California’s biggest technology park, although it pales in comparison to Silicon Valley, where five Santa Clara County cities each have as many computer companies as the entire Spectrum development.

Today, seven years after its birth, the Spectrum is experiencing growing pains. Many tenants have stopped expanding, and some are laying off. While land sales have gone well, a glut of commercial real estate has helped push the park’s office vacancy rate to 23%--slightly higher than the countywide rate of 22%.

To be sure, other business parks that hoped to mimic the Silicon Valley model have encountered similar problems, said Michael Beyard, a researcher at the Urban Land Institute, a Washington-based think tank.

“So many high-tech centers have hit hard times that you don’t hear much about Silicon Valley comparisons anymore,” he said. “The developers didn’t realize that you had to have things like human resources, a favorable business climate and an attractive lifestyle to draw businesses--in addition to the land.”

Change in the regional economy has helped fuel the Spectrum’s growth. Orange County’s technology base traditionally has been centered on the aerospace industry in the north county. That has changed as biomedical and computer companies have sprouted in the south county. These companies, in turn, have attracted a variety of professional services--bankers, venture capitalists, lawyers and accountants--who are specializing in the technology field. “The center of gravity in high-tech is shifting to the Irvine Spectrum,” said Nick Yocca, a partner in a Newport Beach law firm who is an expert in high-tech law. “We’ll probably have to follow our clients and open an office there.”

James L. Doti, economist and president of Chapman College in Orange, believes that the county will lose 10,000 defense jobs in the next five years. But the county should add more than 25,000 high-tech jobs, with Spectrum employers accounting for a good number of those.

“There’s no question we’re losing our defense industry and there is a change in manufacturing taking place,” Doti said. “If we didn’t have the high-tech, we would have had a disaster in the economy.”

More than 150 computer and electronics firms have set up operations in the Spectrum. Some of the better-known names are Advanced Logic Research, AST Research, Toshiba America Information Systems and Western Digital. Western Digital has both its world headquarters and a $120-million, state-of-the-art chip manufacturing plant in the park.

The park counts dozens of medical instrument and biotechnology companies among its 1,000 companies, employing 25,000 people. Although computer companies make up the largest industry segment, the park also houses the likes of AT&T;, Canon, Kawasaki, Mazda and Parker Bertea Aerospace.

Viewed from the air, the Spectrum is a patchwork quilt that spills across freeways and major boulevards. It is bordered by hills to the south and the El Toro Marine Air Station to the north. From the ground, it is a classic combination of Silicon Valley and Southern California: low-rise buildings with lots of smooth curves and mirrored glass, lush landscaping, palm-lined streets and open fields where strawberries still grow.

The business park traces its origins to 1975, when Irvine Co. opened the Irvine Industrial Complex East in an area that would later form the northern part of the Spectrum. The developer hoped to capture the expanding companies that were outgrowing their quarters in Anaheim, the John Wayne Airport area and nearby Los Angeles County.

In 1984, Irvine Co. officials shifted gears from recruiting all kinds of industrial tenants and announced plans to transform a huge parcel in Irvine into a high-tech, research and business park.

The plan called for UC Irvine, a few miles to the west, to play a key role in the park’s growth by producing more engineering graduates and sharing research with companies in the Spectrum, particularly in the biomedical field.

In the past seven years, the number of graduates from both the biological sciences and engineering schools at UCI have doubled. By 2005, the university estimates that it will be producing as many graduates as comparable departments at UCLA and UC Berkeley.

Irvine Co. spent $226 million to build an infrastructure of arterial roadways and overpasses. It also built Irvine’s first Amtrak station and has future plans for a monorail system that would link the park with a larger rail system connecting Orange County communities.

Prospective tenants are shown a promotional film with a lot of high-tech pizazz, while Irvine Co. officialstry to persuade them that the park’s premium rents are worth it. Tenants are told of the Spectrum’s proximity to the newly expanded John Wayne Airport, the cultural and lifestyle advantages of Orange County and its position as a West Coast gateway to the booming Pacific Rim market.

Even small companies are willing to pay premium rents for space in the Spectrum as a way of projecting a successful image. “The Spectrum represents technological leadership, the place to be,” said Michael de Nicola, vice president of operations at WangDAT, a maker of computer storage equipment that moved from Costa Mesa to the Spectrum last month.

But snags in Irvine Co.’s master plan have surfaced. The recession has battered the computer industry, forcing companies such as Western Digital and Toshiba America to lay off hundreds of workers. And the state’s budget woes threaten to slow UCI’s growth.

The steep cost of doing business in Orange County is also hurting the Spectrum’s recruiting efforts. The county has begun losing manufacturers to states such as Nevada and Arizona, where wages are cheaper, taxes lower and environmental regulations less stringent.

For all its vaunted diversity, the Spectrum has proven most attractive to high-tech companies as a location for engineering, research and light assembly operations. With Western Digital’s semiconductor facility a major exception, there are few manufacturing plants in the park. Western Digital built the plant in the Spectrum because it wanted its engineers to be involved intimately with the manufacturing process.

“The higher the content of technology, the more likely you would be to move into the Spectrum,” said Dennis Eversoll, chief financial officer at Toshiba America, which moved there in 1985. “The heavier the manufacturing, the more likely you are to be moving out of the county.”

Company officials have backed away from their original estimate that the park would have 100,000 workers by the year 2000. And Irvine Co. itself has taken steps that will slow the park’s growth.

The developer earlier this year imposed a moratorium on new construction in the Spectrum that will continue through mid-1992.

And the Irvine Co.’s promised shopping mall in the Irvine Center area between the Santa Ana, San Diego and Laguna freeways, has been postponed. The mall, which would have served thousands of Spectrum workers at lunchtime and after work, was originally scheduled to be completed by 1992.

“We’re not going to see a return to the fast growth of the late 1980s in the Spectrum,” said Scott Perley, branch manager of Cushman & Wakefield in Irvine. “It should still continue to grow with the rest of the economy, and the complete build-out will probably happen between 2010 and 2020.”