Originally published in the Feb. 20 issue of Orange County Business Journal
Irvine Co. didn’t find as many new tenants for its roster of offices across the state last year as it did in the year prior, but a bevy of full-building deals and larger leases helped push leasing activity for the landlord ahead of 2021 levels, California’s largest office landlord said.
The company leased more than 10 million square feet of office space to over 900 companies in its four California markets last year, including Orange County, Los Angeles, Silicon Valley and San Diego.
That’s slightly ahead of 2021 levels, when it inked just under 10 million square feet of space with about 1,000 companies.
The majority of that activity occurred in Orange County, Irvine Co.’s largest market.
Irvine Co.’s office portfolio runs some 53 million square feet.
“We are seeing continued demand for premium office space with exceptional amenities, and a strong desire to bring teams together for collaboration and innovation to drive culture and growth,” said Jonathan Brinsden, group president of Irvine Company Commercial Properties.
Class A Gains
It’s another sign that new and high-end office properties have continued to outperform during the troubled office market of the past three years.
As Irvine Co. nears full occupancy for the latest phases of its new office projects—Innovation Office Park and Spectrum Terrace—overall office leasing softened yet again during the fourth quarter “as the market continued to struggle with changes in the workplace that resulted from the pandemic,” according to a market report from Newport Beach’s Voit Real Estate Services.
Vacancy rates climbed nearly 100 basis points to 14.2% during the fourth quarter, according to Voit.
Irvine Co. signed the largest local lease of the quarter with its 115,290-square-foot deal with Apple for a full building at Spectrum Terrace’s third and final phase, which delivered last quarter. The 1-million-square-foot campus is nearly 80% leased.
The first phase of Innovation Office Park, which delivered last year, is more than 80% occupied, with notable tenants including Sega of America and other gaming firms like Postcard Game Studio, a game development studio; Frost Giant Studios, an independent game development studio; and Notorious Studios, a video game studio.
Irvine Co. also pointed to continued demand for its flexible office option, Flex+, which offers move-in ready workspaces with customizable floor plans and lease terms. The company signed more than 1.6 million square feet of Flex+ space to 390 companies over the past year.
“As we’ve continued to grow, we’ve been able to upgrade within their outstanding office portfolio,” said Vince Curcie, founder of Orange County Solar, which recently expanded from a Flex+ office in Irvine to Innovation Office Park.