Less is more for Orange County office tenants, particularly professional services firms.
This is true for the size of the buildings—mid- and low-rise buildings are largely faring better than towers, in terms of leasing—and the size of the office space that tenants are looking to occupy.
Randy Parker, senior managing director at tenant brokerage Savills, said companies are opting for buildings that feel “less sterile than traditional offices,” trading out parking structures and elevators for bigger floor plates, efficiency, and a look “that’s more consistent with their branding.”
Firms have also rethought their office needs as rents have increased.
Parker has noticed this among his attorney clients, where there is “pressure to be more efficient.”
“Law firms are working hard to become more streamlined, and that means finding creative ways to do more with less space,” said Parker, whose firm is the largest commercial brokerage in OC that only represents tenants.
The typical U.S. law firm has cut its office footprint by nearly 20% from 2014, a recent report from Newmark Knight Frank said.
Stradling Re-Ups
The slimming down is evidenced by a recent deal Parker was involved in, when he and colleague Steve Card helped local law firm Stradling Yocca Carlson & Rauth ink a smaller deal in its longtime home at Newport Center.
Stradling, OC’s No. 4 law firm by attorney count, is now leasing 40,000 square feet at Irvine Co.’s 660 Newport Center, down from 60,000 square feet.
Parker said such moves aren’t affecting rents in Newport Center, OC’s most expensive office market, or those near the Spectrum.
Rental rates in the Spectrum are up 18% year-over-year, according to Parker, due in part to the bevy of high-end Irvine Co. office developments that have opened there recently.
More expensive sites like Spectrum Terrace have seen strong leasing, speaking to current demand for more amenitized and unique mid-rise buildings, according to Parker.
Tenants have also responded well to Trammell Crow’s Boardwalk office development in Irvine, which is nearing full occupancy, and Lincoln Property Co.’s Flight project at Tustin Legacy, he said.
“The market is as healthy as I’ve seen it, and that’s likely to continue because new development has been controlled,” Parker said.
