Strasmann: I don't think so. The root of issues during the mortgage meltdown was sub-prime, and we were heavily sub-prime; however, technology is very broad. You have biotech, chips, VR—tech is embedded in all different aspects of our economy now, so one sector might go down, but there are 20 other sectors of technology with tentacles in all different aspects of what we're doing. I think it's great because technology is where the world is going and where the future is. If you look at the availability of skilled labor and the cost of labor and operations, Orange County is very well positioned. It's been a big benefit to Orange County, and I hope we have more expansion in tech-related industries; it's nothing but a positive for us. Those are high-paying jobs. People are consuming product. I'm very bullish on it. We've had a strong first quarter in absorption—the preliminary numbers are very positive, and much of it is due to tech companies leasing space.

GlobeSt.com: How can Orange County protect itself from this type of singularly focused market?

Strasmann: It's very hard to protect against that. When properties are available to lease, owners are inclined to lease up for that product. But technology is very diversified, so I don't see one sector of tech dominating everything.

GlobeSt.com: What can OC offer these tech tenants that other markets can't?

Strasmann: Skilled labor is number one. The cost of labor number two, particularly compared to West L.A. or San Francisco. So, we have skilled labor, yet the cost of labor and the cost to run a business is lower in Orange County than in those markets. Landlords have done a great job of recruiting these types of companies and have done a lot to attract them. The Irvine Co., along with all the major owners in the area, have done a fabulous job of addressing what companies are looking for and the environment they want to work in; i.e. creative office and campus-style amenities—from the Irvine Co.'s product in the Spectrum to Trammell Crow's the Boardwalk in Newport Beach to McCarthy Cook's retrofit of the Met in Costa Mesa and Hines with Intersect in Irvine. There are numerous really excellent examples of new development and repositioning of assets within Orange County. I'm really impressed with what they have done. It's important to understand the future needs of employees. Among the users that we talk to, the number-one issue for them is recruitment and retainment, and Orange County is very well positioned for that.

|

NEWPORT BEACH, CA—There really isn't any downside to Orange County's current tech boom, CBRE senior managing director, Orange County region, Kurt Strasmann tells GlobeSt.com. According to a recent CBRE research report, Orange County's low business and labor costs, compared with major California cities, makes it a viable option for companies.

The report also shows that tech companies are currently seeking 1.8 million square feet of office space in Orange County, totaling 36% of the market's demand; tech companies accounted for 25.6% of office leasing activity in 2016 in this market, up from 13.6% in 2012; and tech employment grew 40.7% from 2005 to 2016 in the region.

Yet, despite a growing concentration on tech tenants that might seem to echo the mortgage meltdown that preceded the Great Recession, Strasmann tells us that technology is broad based enough that even if one sector of technology falters, plenty of others will remain strong. We spoke with him about the tech phenomenon and how he sees it playing out in this market.

GlobeSt.com: Could a tech boom lead to similarly less diversification in this region than is healthy?

Strasmann: I don't think so. The root of issues during the mortgage meltdown was sub-prime, and we were heavily sub-prime; however, technology is very broad. You have biotech, chips, VR—tech is embedded in all different aspects of our economy now, so one sector might go down, but there are 20 other sectors of technology with tentacles in all different aspects of what we're doing. I think it's great because technology is where the world is going and where the future is. If you look at the availability of skilled labor and the cost of labor and operations, Orange County is very well positioned. It's been a big benefit to Orange County, and I hope we have more expansion in tech-related industries; it's nothing but a positive for us. Those are high-paying jobs. People are consuming product. I'm very bullish on it. We've had a strong first quarter in absorption—the preliminary numbers are very positive, and much of it is due to tech companies leasing space.

GlobeSt.com: How can Orange County protect itself from this type of singularly focused market?

Strasmann: It's very hard to protect against that. When properties are available to lease, owners are inclined to lease up for that product. But technology is very diversified, so I don't see one sector of tech dominating everything.

GlobeSt.com: What can OC offer these tech tenants that other markets can't?

Strasmann: Skilled labor is number one. The cost of labor number two, particularly compared to West L.A. or San Francisco. So, we have skilled labor, yet the cost of labor and the cost to run a business is lower in Orange County than in those markets. Landlords have done a great job of recruiting these types of companies and have done a lot to attract them. The Irvine Co., along with all the major owners in the area, have done a fabulous job of addressing what companies are looking for and the environment they want to work in; i.e. creative office and campus-style amenities—from the Irvine Co.'s product in the Spectrum to Trammell Crow's the Boardwalk in Newport Beach to McCarthy Cook's retrofit of the Met in Costa Mesa and Hines with Intersect in Irvine. There are numerous really excellent examples of new development and repositioning of assets within Orange County. I'm really impressed with what they have done. It's important to understand the future needs of employees. Among the users that we talk to, the number-one issue for them is recruitment and retainment, and Orange County is very well positioned for that.