Orange County Has Dueling Tech Hubs

The technology sector is growing rapidly in Orange County, and the market has seen a recent increase in start-up activity. Many of these new and expanding tech companies are choosing to plant roots in the Airport Area market and the Irvine Spectrum market. According to research from JLL, tech start-ups in the Airport area have raised $195.2 million in venture capital, and tech start ups in the Irvine Spectrum market have raised $152.2 million. This collectively accounts for 91% of all start-up funding in Orange County.

It isn’t surprising that tech companies are landing in these two office markets. After all, they are two of the biggest office markets in Orange County, both offering quality space and central locations. “Existing labor pool, quality product, flexible landlords are key factors tech start-ups are located in the Airport Area and Irvine Spectrum,” Scott Wetzel, a VP at JLL, tells GlobeSt.com. “These two submarket are the two-headed tech capital of Orange County.  Long-standing companies like Broadcom and Blizzard—historically Airport Area and Irvine Spectrum, respectively—have generated a multitude of spin-offs and tech startups. The labor pool makes it easier for these emerging startups to hire quality talent.  Quality office product and a unique landlord profile in the Irvine Company also helps fuel the fire.”

The Irvine Co.’s massive office portfolio also helps to fuel activity, giving tech start-ups room for growth without concern about lease term. “Because Irvine Company owns its assets with little-to-no debt, it has the ability to move tenants within their portfolio more easily than a traditional institutional investor who either doesn’t have the critical mass of available product, or has limiting factors, such a lenders or equity partners, who restrain its ability to follow suit,” says Wetzel. “For those reasons, these submarkets have been and will continue to be the tech hubs of Orange County.”

This start-up activity is translating to significant leasing activity with room for growth.  “From a very high-level, Orange County is considered a 5,000 RSF market, meaning the average tenant has about 20 employees,” says Wetzel. “This alone is a testament to the startup nature of Orange County’s two predominant submarkets, but at a more granular level you can see that these companies have the capacity to grow well beyond that.” Oculus is one example. It started with a handful of employees and now employs 1,000 people, or Cylance, which started as a 5,000 square foot tenant and now occupies 160,000 RSF.

Wetzel anticipates more growth, both from existing and growing tech companies as well as new start-ups. “The seeds that have been planted out of the Great Recession are finally bearing much fruit,” he says. “The Oculus, Acorns, Cylance and Andurils of the tech world that are now thriving, were either conceptual or very much in startup mode several years ago.  Year over year we have seen increased growth in these sectors, particularly in the fintech, gaming and cybersecurity sub-sectors.”