OC’s tech companies are setting the trend for creative use of office layouts to attract talent, and other firms are following suit to get further away from “generic cubicle space,” said Senior Vice President Garrett Ellis of CBRE Group Inc.’s Newport Beach office.
Despite a slowdown of late, Orange County has the 15th-highest pace of job growth for high-tech software and services in the U.S. and Canada, the commercial brokerage firm said in its 2019 Tech-30 report released last month. CBRE’s annual Tech-30 report explores the high-tech industry’s impact on office space in the 30 leading tech markets in the U.S. and Canada, as well as 10 up-and-coming tech markets.
“Tech is leading the way at least in Orange County,” Ellis told the Business Journal. “A lot of the other industries are following it, in the sense of they’re watching what tech does. They’re watching how tech grows, and then they’re trying to model it.”
The commercial real estate brokerage said tech companies are also finding creative ways to use space, adding: “It’s no longer a stodgy law firm style office or just generic cubicle space.”
Open Areas
The innovations include “benching” where people are closer together with fewer barriers, more open areas to sit down and also work solo, and flexible areas that can be used as meeting space or for break time—including outdoor spaces.
Other options include allowing people to conduct work throughout the office rather than just operating out of a dedicated cube or office.
While leasing activity remains steady nationwide, rent growth has slowed in some office markets, the CBRE report said.
“This trend is most apparent in large markets where there is a lower concentration of tech companies, such as Dallas-Fort Worth, Orange County and Atlanta—all of which have seen slower high-tech hiring, mainly because of talent constraints rather than a lack of job openings,” according to CBRE.
OC high-tech job growth slowed to 10.9%, or 3,909 new jobs added, in the 2017-2018 period from a 15.7% increase in the two years before that.
Tech Tenants
“We’ve got law firms, accounting firms, insurance companies—those folks are looking at what some of the tech companies are doing,” Ellis said, adding that there is a “war for talent.”
Tech tenants accounted for 16.4% of all leasing deals in Orange County in the first half of this year, with the average asking monthly rental rate hitting a historic high of $3.01 per square foot, according to CBRE.
Orange County is home to data analytics software company Alteryx Inc., which recently announced a move to a larger space at Spectrum Terrace in Irvine; the 183,000-square-foot lease, announced last month, is the largest office deal of the year.
Other notable office tenants include cybersecurity firm BlackBerry Cylance and Palmer Luckey’s border protection startup Anduril, while companies such as network protection firm CrowdStrike got their start here.
“If you look at the charts, we’re sort of middle of the pack. Considering that sometimes we get looked at as L.A.’s kid brother, I think we’re sort of proud of that,” Ellis said. “We’ve grown into a market that readily accepts tech talent and tech companies.”
