For the first time in over a decade, there are no new speculative office projects in the construction pipeline for Orange County.
That’s good news for existing building owners who have struggled to lease their spaces over the past three years and face a shrinking rent roll and looming deadlines for loans.
The county’s speculative office development pipeline has consisted of just three projects over the past year, including two Irvine Spectrum-area projects by the Irvine Co., as well as The Press in Costa Mesa.
All three projects—including the final phase of Spectrum Terrace and the second phase of Innovation Office Park—delivered in the past year, adding roughly 1 million square feet to the county’s office inventory as other projects are demolished to make way for new industrial or multifamily complexes.
The Press is leased to Anduril Industries, which began its move-in process last year into the former Los Angeles Times newsroom. The site, which also includes a new research and development facility, can support 2,500 employees.
There’s an additional 1.4 million square feet of office space planned across two projects for Orange County, though brokers don’t expect them to break ground until the capital markets and leasing environment improve.
During the first quarter, the office vacancy rate increased to nearly 16.9% from 15.8% in the fourth quarter, according to a market report from Newport Beach’s Voit Real Estate Services.
Class A buildings, with their higher-than-average rates and employee density, faced the brunt of occupancy losses, with the countywide Class A vacancy rate rising to 22.4% during the quarter, Voit notes.
This year’s list of Commercial Developers, ranked by completed developments in OC in the past year, includes three office developers, including LBA Realty, which converted a former retail site at its mixed-use Park Place complex in Irvine into a 40,000-square-foot creative office space. Tenants have yet to be announced.
On the healthcare front, City of Hope Orange County unveiled its new outpatient cancancer center last year at the Great Park Neighborhoods.
The 190,000-square-foot Lennar Foundation Cancer Center opened in August and serves as City of Hope Orange County’s primary building for research, treatment and clinical trials.
City of Hope subsequently broke ground on the adjacent 170,000-square-foot cancer hospital, the first of its type in Orange County. That stand-alone facility is expected to open in 2025.
Save for one new hotel—the 124-key Element Irvine—the remainder of the list is comprised of new industrial developments across the county. The sector, combined with multifamily, remains the strongest among commercial uses in Orange County.
Goodman North America, the Irvine-based subsidiary of Australia-based Goodman Group, delivered Orange County’s largest commercial development this year with the 1.5 million-square-foot Goodman Logistics Center in Fullerton. The project is fully leased to Samsung Electronics, which occupies north of 1 million square feet, grocer Sprouts Farmers Market, which occupies 337,000 square feet, and Bandai Namco Entertainment America Inc., which took the final, 173,000-square-foot building in March.
Sares Regis Group delivered 667,000 square feet of industrial space as part of the second phase of the Huntington Gateway campus in Huntington Beach, following the 242,000-square-foot first phase that wrapped in 2021 and is occupied by Amazon.
The two completed buildings in the second phase have been leased to Cambro Manufacturing and Epson America.
Sares Regis is now under construction on three additional buildings in Surf City totaling 347,000 square feet, bringing the Huntington Gateway project to north of 1 million square feet.
“In total, we purchased just over 100 acres in Huntington Gateway and will develop just under 1.6 million square feet of Class A industrial space,” Senior Vice President of Development Larry Lukanish told the Business Journal.
Orange County has 13 industrial projects underway spanning roughly 2 million square feet across six cities, with an additional 1.5 million square feet in the planning stage.