ORANGE COUNTY, CA—Despite a tepid second quarter, the tech industry remains a core driver of office space demand in Orange County, according to reports from Savills Studley and CBRE. The largest transaction of the quarter was an 82,900-square-foot lease renewal at 3349 Michelson Dr. in Irvine, CA, by HireRight, which provides technology-based employment-screening and verification services, Savills Studley reports.
Auction.com was another tech tenant that leased a significant amount of office space in Orange County during the quarter, taking 23,400 square feet at 1 Technology Dr. in the airport area, according to Savills Studley. In fact, most of the large office-lease transactions that took place during the quarter were in the airport area, including Spireon‘s 65,100 square feet at 16802 Aston St.; Belkin International‘s 63,400 square feet at 131 Theory Dr.; Alliant Insurance‘s 55,200 square feet at 1301 Dove St.; Kimball, Tirey & St. John LLP‘s 22,900 square feet at 2040 Main St.; and BP Law Group‘s 22,500 square feet at 1900 Main St. These, plus Regus‘s 20,508 square feet at 30211 Avenida De Las Banderas in South County, TransFirst Group Holdings‘ 31,600 square feet at 5665 Plaza Dr. in West County and International Code Council‘s 23,900 square feet at 3060 Saturn St. in North County, added up to a sum total of 411,508 square feet leased during the quarter among the top 10 transactions.
According to CBRE, robust high-tech employment has played a major role in the recovery of the US office market, and from 2011 to 2013, Orange County experienced a 9.3% growth in high-tech jobs, a 3.5% growth rate during that time period, while office rents grew by 5.2% between Q2 2012 and Q2 2014. Meanwhile, the overall growth rate for rents in the period between Q2 2012 and Q2 2014 increased 6.7% to 5.3% in Orange County. And in Orange County, tech jobs accounted for 7.1% of all new office jobs between 2011 and 2013.
Colin Yasukochi, director of research and analysis for CBRE Global Research and Consulting, says, “Within preferred submarkets—which, in many cases, are the neighborhoods of choice for Millennials and high-tech companies, vacant space has become increasingly scarce. As a result, nearby submarkets may see increased leasing activity by tech companies.”
From an investor’s perspective, Orange County is one of the three markets (along with San Diego and Portland) that offers the greatest potential, CBRE reports. These markets are also attractive to occupiers. “The fundamentals of Orange County align extremely well with the technology employee of the future, and as a result, Orange County should remain a very attractive market for tech organizations,” says Alex Hayden, EVP at CBRE and a local tech and media expert. “Along with the high-quality lifestyle and the highly skilled labor pool, there’s availability of product to house and grow their business. We’ve seen recent evidence of Orange County’s appeal with respect to several large technology companies making significant commitments to the market.”
The rise in technology tenants matches with recent assessments of the improving office sector nationwide. As GlobeSt.com reported last week, the main reason Auction.com facilitated the closing of so many office deals in June is because full-time white-collar office jobs are on the rise, the firm’s EVP Rick Sharga told GlobeSt.com. This is a positive indicator for the economy, he added.