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Enfrastructure Concept Takes Shape in O.C.

Incubator: Its first campus for developing firms is sounding a lot like a full-service high-tech hotel.


On the ground floor, tenants will be able to drop off dry cleaning, attend yoga classes or catch shut-eye in one of five sleep rooms. The coffee bar that serves up the day's first blast of caffeine will become a juice bar after noon and a pub after 5 p.m.

The top three levels feature offices with movable, Lego-style walls designed to flex with tech companies' accordion-like expansions and contractions. The cafeteria opens into an outdoor cafe, where workers can gab about Bluetooth and bandwidth over the fountain's burble.

Need a software upgrade or maybe a flower delivery? A concierge will stand ready to help.

This is Enfrastructure Inc.'s first tech campus in Aliso Viejo, opening in December. And if it resembles a full-service high-tech hotel, that's exactly what founders Scott Blum and James Watson had in mind with their high-tech business campus company.

"Our motto is 'Don't spend the time and money to do it yourself,' " said Watson, a former executive of the national real estate firm Koll Co.

Last month, Watson and Blum, the thrill-seeking founder of online superstore Inc., announced that a cadre of blue-chip tech companies such as IBM Corp. and Microsoft Corp. would back Enfrastructure with $100 million and would supply their products to campus tenants.

Enfrastructure's grand plan is to build a national chain of 18 business campuses, including sites in New York and Denver, that would house young tech companies.

The company has kept the specifics of its plans largely under wraps, but they are slowly emerging in a four-story rust block under construction in Aliso Viejo. Though the first site still sports lots of bare wood, heaps of insulation and miles of exposed fiber cable, it is shaping into a self-contained tech community.

"It gives the little guy the feeling he has his own Microsoft campus," said Sam Olmstead, a vice president at Voit Commercial Brokerage. He is negotiating to put a Mission Viejo software developer and a Laguna Hills electronic device maker in the site.

Enfrastructure's founders are well aware of the skepticism about projects that bank on nurturing risky tech start-ups from concepts into public companies.

Leading high-tech incubators such as CMGI and Internet Capital Group are getting pounded by Wall Street. Just this month, the sagging market for Internet stocks forced Pasadena-based Idealab to abandon its plans for an initial public stock offering.

But Watson and Ross are quick to point out that their concept is different, mixing the edgy, creative culture of incubators with the pragmatism and steady income of old-fashioned commercial real estate.

Unlike CMGI or Internet Capital, Enfrastructure will not trade services for equity alone. It will charge fees too for its packages of space, hardware, software, communications equipment and financial services. And it will choose renters developed enough to have cash flow, not just an idea and a business plan, Watson said.

"That's something I've been advocating," said Nicole Weber, a senior analyst at market research firm IDC who specializes in incubators and accelerators. "They still need the prestige of some early successes, but it's definitely a less risky strategy."

Though the Aliso Viejo campus is just weeks away from opening, Enfrastructure still won't identify its first tenants, except to say that Blum's incubator, ThinkTank, will be among them.

Watson said they will have as many as 60 on-site employees and hinted that they won't all be "pure tech." Units or temporary project teams for companies such as Fluor Daniel Co. or Ford Motor Co. that have larger offices in the area also could be housed there, he said.

Ultimately, analysts said, Enfrastructure's success rides on whether its services and set-up differentiate it enough from other outsourcing and tech-housing gambits to attract future stars.

TechSpace Inc., a 2-year-old New York firm with four smaller, funky-looking locations and two more on the way, is among a handful of companies offering similar services and may be the most demonstrably successful. It boasts 100% occupancy and expects to become profitable right around its third anniversary, Chief Executive Debra Larsen said.

Though she faces intensifying competition both from start-ups such as Enfrastructure and from conventional landlords, Larsen said few of them understand the flexibility the industry demands or can create the kinds of alternative environments where twentysomething techies gravitate.

"It won't work if it's got the wrong aesthetic," she said. Even Enfrastructure's blueprints are too conservative, she said. "If you look at the pictures, you've got the same old insurance cubicles."

Not so, argues Keith Ross, Enfrastructure's vice president of development.

He ticked off Enfrastructure amenities, such as a 24-hour fitness center and ground-floor nooks with Internet access and copiers, meant to leaven tech's 80- to 100-hour workweeks and to inspire networking.

"There's a lot of talent in Orange County. This kind of environment could encourage it to stay here," said Greg Puccinelli, a broker at CB Richard Ellis in Newport Beach, who is negotiating a lease in the Enfrastructure business park for a software company.

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