Rebounding from a dot-com crash and a housing market that’s driven much of Southern California’s workforce out of the area, many corporate tenants are re-examining their office space and contemplating whether or not they need to move up, move down or out.

For the mortgage industry, things don’t seem to be looking too good. “One of the industries with the greatest hand in the current rebound was the mortgage industry,” says Mark Sullivan, regional manager and executive vice president for Studley in Southern California. “But now in almost all submarkets there is space being put back into the market that had been occupied by mortgage and service companies. More space was taken by mortgage companies than all other companies combined.”

Sullivan notes that it is still too early to tell just how much corporate space that was previously occupied by mortgage companies will be put back on the market. But increasingly high interest rates combined with Southern California’s need for low-cost housing has meant fewer refinancing opportunities–and fewer customers for the mortgage industry.

“The lull has been predicted for about three years,” says Kevin Hayes Sr., CEO of the Newport Beach office of Cresa Partners. “But there hasn’t been any appreciable impact yet. Everyone’s waiting for the sky to fall, and there have definitely been signs that the sky may be falling as the housing market has begun to slow.”

Sullivan asserts that this does not necessarily mean people will stop mortgaging, but rather that Southern California will see fewer mortgage companies. The mortgage-company move out hasn’t been negative for everyone, however. There have been plenty of other businesses and industries eager to occupy the empty spaces.

“Orange County had become one of the national centers for mortgage banking companies,” Hayes says. “It’s also one of the tightest major metropolitan areas in the country in terms of low vacancy rates.”

What this means is that companies who weren’t able to squeeze into Orange County’s already juiced market are now catching a break. Others who have already established their presence in Southern California have taken the mortgage fallout as an opportunity to extend themselves into submarkets that they had yet to saturate.

Studley recently found itself eyeing the San Diego market after the firm realized the interest its clients had in that market. “We found ourselves quite busy in San Diego partly because our clients were taking us there and partly because a lot of other opportunities were taking us there,” Sullivan notes. “We really liked it more than we ever have in terms of growth, size and scale of tenants in San Diego and in the marketplace now.”

Many tech firms have also found a home in Southern California. The industry was flailing when Northern California rang in the 21st century, but six years and whole lot of lessons later it may be ready to try again. And though mention of the dot-com bust still evokes memories of vacated buildings, the tech industry is still optimistic that Southern California could be a new home.

“Technology brought us into the last recession and it seems to be bringing us out,” Hayes says. “It’s where most of the job growth is as well.”

He notes that cheaper rents and the need to escape past failures have been the prime reasons why tech companies have moved south. Corporate rental rates in Northern California have been, if you can believe it, even higher than they are in Southern California. The only area that didn’t experience tremendous saturation during this comeback was Silicon Valley because, according to Hayes, it just wasn’t attractive anymore to all the people who remember the big bust–and apparently that’s just about everyone.

“Today Silicon Valley is one of the few markets, the only coastal market in the US, that has a vacancy rate of about 18% to 20%,” he notes. “The dot-bomb caused vacancy rates to reach 30% in some bay area markets. Every other coastal community, and many Northern California communities, is hovering near the single digits.”

Not every business opts for space in prime locations such as Downtown Los Angeles or Westwood, however. Other businesses, such as Sanyo North America Corp., weighed the prospect of being in a high-profile region but chose instead to retain a lower-key corporate space. Serena N. Bordofsky, one of Sanyo’s location scouts, asserts that the company had more in mind than just big-city addresses when it chose its space. The lease was recently up on the two-story office building in Chatsworth that was 51% occupied by Sanyo, and Bordofsky notes that there were a lot of factors they had to consider before deciding whether to renew or not.

“We had to think about our employees,” she says. “We did a demographic study and realized that, in order to keep our employee pool we’d have to stay in the Chatsworth area. The thought was fleeting that we could go into Downtown L.A. or an area like that but then maybe we’d only get five people to go with us. We have 145 people here so it wouldn’t work.”

Sanyo ultimately decided to sign a 10-year lease. Bordofsky acknowledged that, although they were looking for more amenities, such as a closer proximity to restaurants so employees could go out to lunch, the deal eventually worked out as the building owner made a few concessions, such as more parking spots.

Thomas Gast, senior vice president of Ralph’s real estate division, notes that there are a plethora of priorities one must consider when entering into the Southern California market. For some such as Sanyo, employee satisfaction may trump all others, since a high-profile location would do a company no good if it didn’t have workers willing to relocate or commute there. For others, such as a giant supermarket chain, “convenience, access, visibility and proximity” are all priorities, according to Gast.

Whether the corporate tenant specializes in groceries, semiconductors or real estate, Hayes asserts that the plethora of new businesses scouting out the Southern California area has done wonders for the region’s image.

“Southern California used to be overly reliant on defense contracting or the entertainment business,” he notes. “But all of Southern California, and Los Angeles especially, has matured into a very broad-based economy.”

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