How Landlords Can Attract a Tech Companies

Tech companies have become the crème-de-la-crème of office tenants, and they are looking for very specific product. Tech companies are growing rapidly throughout Southern California, and tech communities are springing up. These companies want amenity-rich campus-style office settings and high quality. Many landlords want to attract tech companies, and to capture the demographic and their business, it is crucial that landlords adopt the characteristics that tech tenants want.

“Today, the market is landlord-favorable, but when the pendulum swings, it will be critical that landlords have incorporated university-type amenities to their commercial office campuses,” Scott Wetzel, a VP at JLL, tells GlobeSt.com. “The amenity war shows no signs of slowing, so staying ahead of the curve, while remaining practical and avoiding fads, will be the key to success.”

Landlords are also competing with co-working spaces for tech companies. Many smaller and growing tech firms have fueled growth of co-working spaces, like WeWork. Often, co-working tenants grow into larger spaces, but the amenity packages and options make them an attractive alternative to direct space. “We are seeing an increase in co-working space as a result of tech start-up activity. WeWork is currently 100% leased in Irvine Spectrum and has recently opened a new location in Costa Mesa with plans for 1-2 more in the Airport Area. Regus’ Spaces concept, WeWork’s most consistent competitor, has also opened at Hines’ Intersect project and will soon open in Irvine Company’s Quad project,” says Wetzel. “Spaces also opened a refurbished location at McCarthy Cook’s The MET in Costa Mesa.  Smaller operations such as Industrious and Common Grounds are also looking to get their share of the growing tech and freelance market in Orange County, which in my opinion is one of the many signs that the tech industry is alive and well in Silicon Beach’s little brother to the south.”

Landlords do want to attract tech tenants, but they should also be cautious before signing a tech tenant. Many tech firms are new and growing, and a landlord should look at a firm’s value proposition, leadership structure and capital stack before committing to a tenant. That could mean growing into a major company, but there is also risk of the company shrinking or failing. “Upfront credit can be a risk, but for discerning landlords who are willing to get into the weeds of how a company is run there is ample opportunity to secure the “next” Oculus,” says Wetzel. “They may come and go, but as you’ve seen with Palmer Lucky, he returned and is ramping up a 600-person operation.  I personally think Brendan Iribe will come back to Orange County as well and start another venture, and whichever landlord is lucky enough to attract his company, will surely benefit from the inevitable success that he brings with him.”