OC’s Office, Business Complexes go From Opulent to Industrial
How you define an office or business park depends on who you ask.
Orange County’s largest office and business parks, as listed by the Business Journal on pages 39 and 40, range from the 3-million-plus-square-feet and growing Irvine Spectrum to the 457,355-square-foot Pacific Business Center in Lake Forest.
Then there’s the opulent setting of The Summit Office Campus in Aliso Viejo and the more industrial Brea Industrial Complex. Don’t forget the high rises around John Wayne Airport and the trendy two-story flex-tech buildings that dot much of the county’s landscape.
But OC office and business parks have at least one thing in common, according to Paul Marshall, senior vice president of real estate development for Opus West Corp. in Irvine:
“An accumulation of multiple buildings in concert together, hopefully, with amenities.”
“Amenities”,from high-capacity network wiring to nearby restaurants and shops,are a big selling tool for many tenants. For other park dwellers, being located within the highest profile business area, regardless of lease rates, is key.
The Airport Area
While OC has never been a high-rise hot spot, vertical is alive and well, according to Opus West’s Marshall. Many tenants want the hustle and bustle of a central business district, he says. In OC, that’s the airport area, where buildings typically top out at about 12 stories.
The airport area saw the construction of eight new high-rise buildings in 2000, according to a report from Grubb & Ellis. High-rise tenants range from attorneys and accountants to consulting and financial firms.
The high-profile nature of Irvine’s central business district brought Pricewaterhouse-Coopers LLC and Sun Microsystems Inc. to the area last year.
For these and other companies, the higher rents and limited flexibility of high rises is a tradeoff for a high-profile address and the ease of doing business with other local companies. Business and office parks have a “clustering effect,” Marshall said.
The airport area also has seen large warehouses converted to office space, while other facilities are giving way to data centers. A big boon to the area, though, has been in the so-called “flex-tech revolution.” The low-rise, concrete tilt-up construction found a nice fit in the airport area and in South County.
South County: Growing Pains
In 1984, The Irvine Company faced a “locational decision,” according to Bob Williams, president of the company’s Irvine Industrial Co. division. The Irvine Business Complex next to John Wayne Airport was quickly running out of space, and the company had demand to expand. They looked to the south end of Irvine, settling on a once-sparse area now known as the Irvine Spectrum.
Sixteen years later, “the Spectrum is only half built out,” Williams said. “We’re still looking down the road, continuing to focus on the flex building, campus environment.”
One of the keys to moving farther south for the Irvine Co. was the availability of space and the ability to expand. That remains a driver of South County. The Spectrum has spurred a number of similar projects in the area, from the Summit Office Campus to parks in Foothill Ranch and Rancho Santa Margarita.
With University Research Park, the Irvine Co. has taken a different tack. The Irvine Co. has 22 buildings at the research park next to the University of California, Irvine.
“Tenants must have a collaboration with the university,” Williams said. “The arrangement provides a large number of research facilities and working laboratories where students work.”
Though not tied to a university, Parker Properties LP’s Summit Office Campus looked to the architectural style of Stanford University for inspiration, according to company officials.
The project followed a philosophy straight out of the movies: build it and they will come. That’s what founder John Parker did based on a tenant demand study of the South County area. The study showed that 67% of the employees at Fluor Corp. lived south of the engineering company’s former Irvine headquarters. And half of QLogic Corp.’s employees were south of its onetime Costa Mesa location. Both eventually moved to the Summit.
The tenant study said there was strong demand for an integrated workplace with amenities, flexibility and the ability to grow.
Finding an area with enough space to expand is essential, said Russell Parker a principal with Parker Properties. Architecture plays a role, he said, though it’s secondary.
“We don’t care about architectural awards,” Parker said. “We want timeless, structurally sound, horizontal buildings with large floor plates and an ability to expand.”
For Parker, expansion means horizontal growth, if possible. That’s a luxury afforded by South County.
“We may see a move toward vertical construction as land gets more scarce, but I don’t see anyone building the 20-story buildings.”
Comeback Kid: North County
Though South County gets the lion’s share of attention, North County has earned renewed interest. The region boasts the Warland/Cypress Business Center, the third largest office and business park in OC. According to a recent report by CB Richard Ellis, lower rates coupled with increased tenant demand have made Cypress an attractive area.
Cypress’ edge has been its ability to attract a variety of technical-based tenants, including Jacobs Engineering, which recently leased 90,000 square feet. The area also is home to several Japanese companies, including Sony Corp. and Matsushita Electric Industrial Co.
Meanwhile, large projects are under way in Cypress, Buena Park, Anaheim and Fullerton. And the Voit-Brea Business Park, a project geared toward light manufacturing, is set to break ground in February.
While still home to several large distribution warehouses, North County has lost some of its market share to the lower rents and abundant landmasses found in the Inland Empire.
According to Clyde Stauff, a senior vice president of Colliers Seeley International, it’s difficult for many tenants to justify the economic feasibility of running manufacturing and distribution centers from North County when rents are so much cheaper in Ontario and other areas.
“The North County is more geared toward basic manufacturing and distribution,” Stauff said. “But we’re in very short supply of those types of facilities. Due to the fact that land prices are so high, it’s difficult to develop them.”
Capitalizing on the demand for flex-tech, some developers have rebuilt distribution centers into office and industrial space.
“Some warehouses will convert from basic manufacturing to high-end manufacturing tech use,” Stauff said.
For Robert Flaxman, president and chief executive of Crown Realty and Development, North County remains a place of guarded optimism.
“We’ve had significant success here, but my feeling is the North County is a thin market. It tends to be volatile,” Flaxman said. “We’re both buying and building. We’re focusing on buildings with large floor plates, horizontal.”
As land grows scarcer, developers may want to go more vertical, but, according to Flaxman, tenants could resist. He said he believes North County will continue to lure insurance companies, financial institutions, techs and telecoms,”those companies that have high employee volume.” n
