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Tuesday, Jun 28, 2022

TI Trends Expected to Withstand COVID-19

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Open, collaborative, modern: buzzwords for office design in recent years have centered on a floor plan that defies a traditional cubicle-based atmosphere for a flexible space that encourages face-to-face interaction.

Will that trend remain as Orange County companies rethink their office space in the wake of COVID-19, which has forced distancing and privacy to take precedent?

Tenant-improvement contractors seem to think so.

Irvine-based Ram Construction, which specializes in creative office build-outs such as Evolus Inc.’s new Newport Center headquarters, said it recently secured a handful of new office projects from tenants still bullish on the collaborative concept.

“Companies are still able to maintain a 6-foot distance between employees because more people are working from home,” said Principal Matt Renault, whose firm returned to our annual list of Tenant-Improvement Contractors this year, coming in at No. 5 with $68.7 million in 2019 billings.

Turelk Inc., a Long Beach-based firm that operates locally out of Newport Beach, said companies going through an office build-out have considered safety protocols in their new layout, but have not significantly changed their design.

The company is leading tenant improvements for Glaukos Corp.’ new headquarters at the Element office campus in Aliso Viejo; LPA is the architect.

Turelk Vice President Marcos Ramirez said Glaukos has been in a growth mode, and as such, is “making decisions quickly in order to get their office up and running.”

TI companies across the board note strong demand from healthcare and life science companies, a trend that was bolstered by the pandemic.

Strong 2019

The market for contractors appears to be picking up after several stalled months, which placed a halt on years of gains for the industry.

2019 was no different, classified by many companies as a profitable year for TI contractors; the 30 largest firms in OC saw a 28.5% jump in total billings to $1.6 billion last year.

“It was a booming economy with many companies looking to expand in Orange County, led by the office sector,” said Lia Tatevosian, division manager of San Francisco-based Swinerton Inc.

The company had a successful year of its own—the Santa Ana office reported a doubling in 2019 work with $250 million in billings, earning it the top spot on this year’s list.

Tatevosian pointed to Irvine and Santa Ana as strong markets for the firm last year; the latter city is also home to the company’s new local headquarters.

It paid $6.6 million for the 32,000-square-foot 200 N. Main St. building in the city and wrapped the build-out last year.

“We went from a traditional Irvine office to a collaborative, open space concept that really maximized the space. It turned out very nice,” Tatevosian said.

The office has about 135 employees; it’s currently about 20% occupied at any given time.

“We started to return to the office, but held off in moving forward with the recent spike in COVID-19 numbers.”

Market Pickup

Though the market has picked up in recent months, with May and June fairing much better than the frozen March and April months, tenants are still in a wait-and-see mode.

“Many have delayed the start of their project,” Tatevosian notes.

As many employees continue to work from home, companies are pausing their plans for the office for the near future, said Ramirez, whose firm handled many of WeWork’s build-outs locally, such as its Lakeshore Towers location on Von Karman Avenue in Irvine.

Companies are instead looking for quicker fixes, hiring design firms like LPA, Gensler and H. Hendy Associates to retrofit their space into one that’s in line with CDC recommendations.

“Everyone will eventually get back to the office, whether it’s for one day a week or five,” Ramirez said.

Ram’s Renault is bullish. His firm, also led by Principal Spencer Moran, is expanding. It’s been hiring several new executives in the past month and opening a fourth office in Austin, Texas.

“If you called me four weeks ago, I wouldn’t have been quite as bullish on the market. But now, people are making real estate commitments and that is trickling down to us.”

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