Creative Space Creates Parking Opportunities

IRVINE, CA-The move to creative space in the office sector has provided the construction community with a new source of income as older, obsolete space is converted to fresh uses, but it also presents a new dilemma for owners and developers: parking. With so many more employees in the same square footage, old parking scenarios may not accommodate today's modern office buildings, Brian Childs, EVP and branch manager for NAI Capital here, tells GlobeSt.com.

As GlobeSt.com reported last week, office absorption is expected to continue its slow and steady pace for at least another year as the sector gains strength, according to Childs. He says he believes the county will remain a tenants' market probably through 2015.

But the issue of parking will need to be addressed at some point, he adds. “I think there's opportunity for investors or developers to build projects or find projects with better parking for sure. They are not addressing this issue.”

Sometimes developers can find a property adjacent to the one they're developing or converting to creative office and combine parking with it, “but as Orange County is being urbanized, there will be more pressure to find parking,” says Childs. “That's where we're headed right now.”

One trend Childs is seeing in the Orange County office market is that full floors are sitting vacant in many buildings. “A lot of landlords have miscalculated the market over the past two years and have been compiling full floors [for single tenants to lease], but that's not happening. There are over 90 full floors here in the Airport market alone.”

Some larger spaces are vacant and others are becoming vacant, Childs adds. “Cash Call is giving back multiple floors in Orange, so you're getting floors coming back into the market now. The question for these landlords is, 'Do we multiple-tenant these floors or do we wait for a full-floor tenant?' The rates are going to go up, but how long can you wait?”

Another trend he's seeing is that class-A office investment purchases are topping $300 per square foot for buildings like 2030 Main and 895 Dove in the Airport submarket. “That's where the money is going right now. If you follow the money, you understand that a lot of investors are speculating on the likelihood of future return growth here in Orange County.”