Office’s Mixed Bag

 The office sector in 2021 “will be the most interesting to watch as employees start to return,” notes CBRE’s Kurt Strasmann.
The product type has been marred by uncertainty as the workforce continues to be largely remote, and employers question their space needs moving forward.
“Most tenants have opted to pursue a shorter-term lease, or potentially even downsize,” said Bob Thagard, executive managing director of Cushman & Wakefield’s Irvine office.
This uncertainty has yet to have a tangible impact on asking rents, brokers note.
“While some landlords may provide concessions in this market, a lot of tenants are still willing to pay a premium for newer product,” Thagard said.
In the midst of the uncertainty, a huge office lease was announced last month when Anduril Industries Inc. struck a 640,000-square-foot deal to move its headquarters to The Press, an under-construction creative office project on the former site of the LA Times printing facility in Costa Mesa.
“This is an incredibly exciting deal for Orange County, especially as office deals have been challenged in the wake of COVID-19,” said George Thomson, a senior managing director at Newmark who along with colleague Jay Nugent brokered the lease on behalf of the landlord, a joint venture between Foster City-based SteelWave LLC and Dallas-based Invesco Real Estate.
Coworking, perhaps the hardest sector hit within the office market, is still a question mark. WeWork, once the largest and fastest-growing player in OC’s shared space scene, gave back portions of its local footprint over the past year including its full-building lease at Spectrum Terrace.
A new deal for that newly built, 116,000-square-foot space is expected to be announced soon with a well-known tenant finalizing a deal there, sources indicate.
“We are optimistic about the office sector, even if it’s taking a longer time to recover,” Thagard said.