IRVINE, CA—The newly termed “Tech Coast” is Southern California’s answer to the Silicon Valley, Royce Sharf, EVP and branch manager of Savills Studley‘s Orange County office, tells GlobeSt.com. The Orange County office section of this region is being driven by tech tenants, similar to its Northern California counterpart, as GlobeSt.com reported last week. We sat down with Sharf to discuss tech tenants’ impact on the market and where this is leading Orange County.
GlobeSt.com: We’ve recently heard Orange County being described as the “Tech Coast.” Is this a term you’re hearing, and what is the reason behind it?
Sharf: Actually, it is my understanding that the Tech Coast term represents a region from Santa Barbara to San Diego and is inclusive of Orange County. It is Southern California’s response/challenge to the more well-known and established Silicon Valley. It is accurate, as Los Angeles, Orange County and San Diego continue to be leading hotbeds of global technology, creativity and innovation, but the moniker is also a bit of creative marketing!
GlobeSt.com: Aside from the renewal by HireRight, what other recent transactions have led to this moniker?
Sharf: Depending on the definition of recent, there are several high-tech companies leading the demand for Orange County commercial space. Tech giant Broadcom is reportedly close to inking its new 2-million-square-foot campus. Western Digital has now expanded its global headquarters to more than 500,000 square feet, and Panasonic Avionics has grown to a similar headquarters footprint. Ingram Micro, Q Logic, Emulex, Dell, Google Blizzard Entertainment and Kingston Technologies are some of OC’s other large tech users. If you expand the definition of high tech to include the life sciences, tenants such as Allergan, Applied Medical, Beckman Coulter and Edwards Lifesciences also have a significant presence and employ thousands of OC workers.
GlobeSt.com: What do you anticipate happening with the tech sector in Orange County in terms of absorption, vacancy, lease rates and development in the near future?
Sharf: The Orange County tech sector will undoubtedly continue to lead the demand for office space. While some corporate consolidations, such as Dell’s acquisition of Aliso Viejo-headquartered Quest Software (they recently sold one of Quest’s two headquarters buildings with a short-term leaseback in place), may result in near-term excess space, the overall trend is for tech to have sustained needs for additional space within this market. Several prominent Orange County landlords are making upfront, speculative commitments to provide space that will appeal to innovation-economy companies. Firms such as Bixby Land Co. and the Irvine Co. are investing in spec suites within their portfolio that are built out to appeal to the modern and flexible office user. Early evidence seems to indicate that demand for such spaces will attract forward-thinking firms, often willing to pay a slight premium as compared to more-traditional office-space terms. The growth of the tech sector is also spurring investor interest.
GlobeSt.com: What other office trends do you see emerging in Orange County?
Sharf: The densification of the workplace has finally arrived in Orange County. Long popular around the world, the more-efficient use of office space on both a local and national level is a trend being set by the tech sector. A combination of new, younger generational influences and the desire for both collaborative and flexible space is revolutionizing how companies plan and use office space.