Creative Renovations Hit Class-B Office

IRVINE, CA—Redevelopment activity among class-B office properties is a burgeoning trend in Orange County. The activity is a way to enhance older product to make it more attractive for users and to enable them to attract and retain talent, Colby and Blaine Annett, co-managing partners of Stream Realty Partners here, tell GlobeSt.com.

“We're noticing landlords trying to listen to tenant demand,” says Colby Annett. “Tenants want unique amenities for their employees—not only in an office building, but outside, too. They want space that's WiFi equipped, with outdoor seating and above-standard parking, possibly with a basketball hoop or bocce court, so they can either work inside the space or go outside for quick brainstorming sessions.”

Properties that Stream has helped to rebrand, such as Von Karman Tech at 16842 Von Karman Ave. here, have implemented several of these outdoor features for tenants to utilize, says Colby. “There's a market for redeveloping existing properties, but adding amenities to the inside and the outside.”

Anaheim Corporate Plaza, a five-building campus owned by Seligman Western Enterprises Ltd. and located in Anaheim's Platinum Triangle—which encompasses Angel Stadium, the Honda Center and numerous upscale multifamily developments—is another project undergoing extensive landscaping and exterior renovations to help attract a more-creative user, Colby says. “Here in Orange County, it's not full creative like you'd find in Northern California, but there's definitely a creative-minded type of tenant that can utilize a lot of the outdoor seating, riding trails and other outdoor amenities.”

Another amenity that's being added to these properties is garage doors that open to the outside, allowing further access to other portions of the property, says Colby. “These tenants don't want the traditional office space that's out there. They don't want secluded private offices or confined, closed-up space or to be inside all day. One of the great natural amenities we have here in Orange County is the weather—you can usually go outside on any given day and it's very pleasant. Tenants want to be able to access that.”

Class-B properties are ideal for these indoor/outdoor amenities that wouldn't work in class-A high-rise space, the Annetts say. “It's hard to take a class-A high-rise where the user wants. They're looking at a one- or two-story building they can park in front of and walk around the parking lot and use a feature to create a bocce ball or basketball court. This works much better on a class-B or even an industrial building being revitalized into an office use.”

Colby says there's a lot of talk about taking one-story flex projects and redeveloping them into creative space going on in the Irvine Business Complex. “You can still command a higher rent on office space. And since land is so scarce and development costs are still high on new construction, it makes sense to repurpose existing buildings—not just for office, but also for multifamily. You can drive around Jamboree and MacArthur and see all the apartment development going on with former industrial buildings being repurposed into multifamily.”

Regarding the indoor/outdoor renovation trend, Blaine Annett says, “The tenant doesn't want one or the other, but all of it. It's not that you can come in and just redo the outside of the building, the keep the inside as the same tired, old space. Or vice versa—you can't just build out the indoor space and not provide outdoor amenities—tenants will see through that as well.”

Not all tenants are seeking this type of space, Colby interjects, but it's also not just for those seeking a creating environment today. “We're trying to build what we believe and what tenants are saying is the office of the future. They want to have all those amenities, so we want to attract tenants currently in traditional office space and show them that this is where office is headed.”

He adds that an amenity-rich environment will pick up steam with other types of tenants. “It won't take the traditional law firm into this type of environment, and there are lots of financial-services and law firms that aren't the right candidates for it. It's a smaller buyer pool, but it's growing quickly. It's up to ourselves, the Irvine Co. and Bixby to continue to redevelop this type of office space so tenants can touch it and feel it and see how it works.”

Adding creative touches to class-B space is also a tool for recruiting talent and hiring the best employees, adds Blaine. “It may not be traditional space, but there are professional service companies that will look at this type of space who are trying to hire younger-generation talent, and it's appealing to them. It's a progressive way of looking at office space.”