Newport Center Drive’s role of prominence in Orange County’s office market—including prominent rents—remains unsurpassed, according to a new national brokerage report.
The street’s glitzy buildings, which circle the Fashion Island mall, charge an average monthly rent of $4.18 per square foot, the most of any street in OC, according to a report by Chicago-based JLL.
That’s about 50% higher than the typical class A office building in the county, which enters the year with an average monthly rent of roughly $2.78 per square foot, up about 7% over a year ago.
Newport Center ranks No. 15 among all U.S. streets and sixth among streets in California in terms of the priciest rents, according to the report.
Landlords with space on the top U.S. streets are having no trouble filling buildings, according to the report. Vacancies at the locations are slightly better than the national average, and are about 12%.
Newport Center office space totals about 2.5 million square feet, the bulk owned by Newport Beach-based Irvine Co. Vacancy rates there are about 10%, according to brokerage data.
Menlo Park’s Sand Hill Road, home to numerous venture capital and professional firms serving Silicon Valley and tech firm headquarters, is the most expensive street in the country for tenants; monthly rents average about $9.95 per square foot.
Apparently no Newport Center tenant pays nearly that, but other brokerages’ recent data suggested some space at the recently built 520 Newport Center Drive tower has been leased for nearly $9 per square foot. The 21-story tower, which opened in 2015, is home to a number of banking and investment firms, including Janus Henderson Inverstors’ Bill Gross, Bank of America Merrill Lynch, Wells Fargo Advisors, and Wing Lung Bank.
Locally-based Tarsadia Investments LLC, which invests in hotel properties and other assets, leases the top floor, reportedly for at least $8.50 per square foot, per month, sources tell the Business Journal.
Tech Drivers
Traditional drivers, such as the financial, law and consulting industries, continue to make their presences felt on the country’s most expensive streets, but tech is having an outsize effect, evidenced by the fact that five of the top 10 streets in the ranking are tech hubs, the JLL report said.
“As tech companies mature, their space needs begin to mirror those of traditional white-collar industries in these expensive locations,” said Scott Homa, JLL U.S. director of office research, in a statement. “Sand Hill Road is no longer the only example of this. We see it in cities like Boston, Cambridge and Austin where major tech players have leased large blocks of premium space.”
Boston and Austin are among cities most national reports mention as leading candidates to land Amazon’s second headquarters campus. Having an average office rent well below that in most other large West Coast and East Coast markets is one of the biggest selling points in the city of Irvine’s pitch for the HQ2 campus (see Bren story, page 1).
Art and Office Doors
Another commercial brokerage, tenant representative Savills Studley, is a recent move-in at 520 Newport Center, having taken over the eighth floor.
Its offices, designed by LPA, have a decidedly artsy feel. The column-free floor features 20 floating walls displaying more than 30 artworks, and a “pristine black and white color scheme and museum-quality lighting,” the firm told the Business Journal when it moved in.
Senior brokers have individual perimeter offices, while the floor’s four corner spaces are devoted to communal areas rather than the typical executive suites.
The decision to eschew the kind of open-air, collaborative spaces in many creative-office designs was by design, and should help make brokers more efficient, according to Executive Vice President Royce Sharf.
No corner executive offices was also a strategic choice.
“The office is a reflection of a more egalitarian culture, and as we are merging two operations, it is important for all of us to be on equal footing,” said Senior Vice President Pat Murphy, who’s branch manager along with Sharf.
The local office of Savills Studley became OC’s largest tenant representation firm last year after acquiring the local operations of fellow brokerage Cresa Orange County.
