Fixing a Hole
A new building’s gain is an old building’s loss.
Most tenants moving into the county’s newest buildings are consolidating from older ones. While it’s hard enough to fill a new building these days, try filling a big hole in an older one.
Ideally, landlords at older buildings that have seen tenant departures to newer ones want to fill the vacated space with another single tenant, according Steve Case, senior managing director with the Orange County office of CB Richard Ellis Services Inc.
But that’s not realistic, he said. There just aren’t that many companies out there needing 100,000 square feet or so in an older building.
The most common strategy: split up the older space and renovate it for several tenants.
“It has actually become more favorable for second-generation property,” Case said. “That way, the property manager can stagger the leases so there’s no huge swath of space becoming due at any one time.”
The move toward subdividing space also fits demand in the current market. Smaller tenants,those wanting 5,000 to 10,000 square feet,are the market it seems these days.
But filling a vacated big space with smaller tenants can take a while, according to George Economos of the Newport Beach office of NAI Capital Commercial.
“It can take up to two years to fill that space and at prices lower than the original tenant,” he said.
,Daniel D. Williams
