LAGUNA HILLS, CA—Making sure employees are happy at work is a major driver behind the office-amenities arms race, in which what may once have seemed like a crazy idea is no longer, Lincoln Property Co. leasing agent Kevin McNeil tells GlobeSt.com. McNeil handles the leasing for Oakbrook Plaza, a 120,000-square-foot, class-A office asset here, purchased a year ago by Lincoln and its partner Angelo Gordon.
At the time of purchase, the asset was approximately 75% leased with rents at $2.35 per square foot. Over the past year, the leasing team has completed more than 15 leases and increased occupancy up to 97%, and rents are now at $2.85 per square foot. Among the reasons for the increase in occupancy and rental rates, according to Lincoln, are the owners' investment in outdoor collaboration spaces, on-site amenities, “back of house” upgrades and other improvements; drafting off of Irvine Spectrum as rents and occupancy increase there; benefiting from area redevelopment (retail, apartments, restaurants, etc.) both at nearby Five Lagunas Mall and the area in general; and improvements in market conditions, where tenants are making decisions to expand, open new offices and relocate with longer term commitments.
We spoke with McNeil about the project, what owners looking to reposition Orange County office assets should keep in mind and which choices should be avoided.
GlobeSt.com: What about this asset is compelling tenants to lease space and pay higher rents?
McNeil: This is a really unique location, a class-A environment, and it offers some of the amenities in the area without crossing the El Toro line. The owners enhanced the property's image with outdoor furniture, an improved lobby area and a micro park, which gets a lot of use. There's a cornhole game and patio lounge furniture, and it gets used every day by dozens of people.
Parke Miller with Lincoln Property did a great job at choosing things tenants could use and feel in the property. Tenants felt they had an established and well-capitalized owner to invest in the asset and make it better. When we went for lease renewals, we told tenants we were redoing the lobby, the signage, adding a micro-park, and we said, “We're asking you to pay a bit more initially, but we're trying to give you more.” Their answer over and over again was, “Yes.” Our renewal ratio was incredibly high. Only one tenant moved out, but that was because they were consolidating several offices in the Orange Crush area. It's also nice that we're on-site for leasing.
GlobeSt.com: What should owners looking to reposition office assets keep in mind, particularly in Orange County?
McNeil: Within the past few years, company morale has been a big part of decision making. If you can provide a decision maker with something employees like about the office, they'll gravitate to it. Parke is really into people's work life being a great life. He wants to give all the people who work there some great amenities to enjoy their work life.
GlobeSt.com: Which choices are more likely to lead to higher rents, and which should be avoided?
McNeil: Visible amenities tenants can gravitate to immediately will lead to higher rents. Avoid things that aren't visible, like a new roof, which is not as necessary. Also, many owners choose old-dog brokers to handle their leasing; you need an agent who's available. A lot of things get bogged down with brokers; there aren't many who truly care about the property and are available to do a great job on the asset.
GlobeSt.com: What else should our readers know about Oakbrook Plaza?
McNeil: I work on this assignment with Brandon Rohe and Garrick Shupe leasing team. One more member, who is the greatest admin in world, is Jolene Coleman. Together, we're bringing Parke's business plan to life—his plan, his vision—and executing on his game plan.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
