ORANGE COUNTY, CA—As demand for large blocks of space drives availability in Central and North Orange County lower, will we start to see this type of space come out of the ground? According to Savills Studley's Orange County office sector report for Q2, EVP Royce Sharf says, “Development activity is starting to gain some traction as developers respond to demand.” But what type of space can we expect to see being built?

“The next wave of office development activity will be larger, spec-office projects with some level of pre-leasing commitment (other than the Irvine Co., which is planning and building a variety of new projects without preleasing requirements),” Sharf tells GlobeSt.com. “These projects will be next generation with regard to operational efficiency and functionality. We will not see the proliferation of two-story concrete tilt-up that was typical of the last development cycle.”

According to the report, smaller and mid-sized tenants still have quite a few options to consider. In contrast, companies requiring blocks of 50,000 square feet or more face greater challenges. Also, larger tenants have become more aggressive since six leases in excess of 75,000 square feet were completed during the second quarter. MicroVention signed a 205,000-square-foot lease for a new four-story building to be developed by Parker Properties in the Summit Office Campus. Also, Broadcom unveiled additional details about its $778-million, five-building complex on 73 acres in Great Park, with plans calling for two development phases and a total build-out of 2 million square feet and space for 8,000 employees; Phase 1 is set to be completed by 2017 and will comprise 1.1 million square feet. Both MicroVention and Broadcom will not be moving to their new locations until 2017, but the market is already eyeing the space they will leave behind.

In the short term, merger activity could generate a couple more blocks of space, the report says. In the wake of Actavis PLC's $72.5-billion acquisition of Allergan, the drug manufacturer is likely to vacate 60,000 square feet at 2600 Michelson when its lease expires in early 2016. A year ago, the maker of Botox and Latisse had 2,500 workers in Orange County, but significant layoffs have trimmed the number to just over 1,400.

Other larger tenants are opting for renewals, including Loan Depot, which renewed in Q2 its 131,300-square-foot space in Foothill Ranch and committed to 89,500 square feet at 25500 and 25510 Commercentre as well as 17,955 square feet at 3090 Bristol Costa Mesa. And Cox Communications took 73,000 square feet at nearby 27121 Towne Center. Other noteworthy leases include Ventura Foods' 129,900-square-foot renewal at 40 Pointe Dr. in Brea and Kofax's 91,100-square-foot renewal at 15201 and 15211 Laguna Canyon.

Savills Studley says most of the big blocks of space with 2016 occupancy are spoken for, and in turn, focus has shifted to proposed developments with occupancy in 2017 or later. The County Board of Supervisors has proposed 1.9 million square feet of office space, 220,000 square feet of retail, nearly 3,080 apartments and a hotel on two sites totaling 144 acres next to Orange County Great Park. Master developer Lowe Enterprises may break ground in 2016 if the plans are approved. Additionally, Trammell Crow may move ahead with a 550,000-square-foot office tower on a 7.5-acre site along Jamboree Rd. near John Wayne Rd. that it bought a few months ago. Trammell Crow hopes that the complex, called the Boardwalk, will open by the summer of 2017. And Hines has filed plans for a project called California Green on an adjacent parcel.