The study, which looked at office and industrial leases in the airport area and south county from 1997 through the third quarter of this year, found that the top business types are: high-tech hardware and software manufacturers, dot-coms, telecoms, bio-medical companies, CPA/law firms, and financial services companies.
"High-tech tenant users continue to be strong in an atmosphere of diverse tenant demand," says Craig Jones, report author and research services manager in the Orange County office of Grubb & Ellis.
High-tech companies, excluding Internet and telecom firms, accounted for 32.7% of leases in 1997, 29.6% in 1998, 26.9% during the first half of 2000 and 31.6% in the third quarter of this year. The most growth was noted with dot-coms, which accounted for 19.6% of leases during the first half of 2000, up from 1.2% four years ago.
Telecom companies also are on the rise, accounting for 8.8% of CRE deals during the first half of 2000 and 7.5% in the third quarter. The previous three years saw telecom firms involved in between 4% to 7% of lease transactions.
The county is also experiencing growth in bio-medical--possibly a result of its close proximity to San Diego County, which is a well-known hub for the bio-medical industry. In 1997 bio-med firms accounted for 9.5% of lease transactions, then dipped to a low of 4.4 % in 1998, rebounding to 8.2% in 1999 and then falling off again to 6.2% during the first half of the year and dipping to 4.5% during the third quarter.
The number of CPA/law-firm transactions tripled over the four-year study period. CPA/law-firm leases were at a four-year high of 13.5% during the first half of 2000, up from 4.2% in 1997. Mortgage companies, on the other hand, remained strong over the first three years of the study period, then began dropping off this year as interest rates increased, notes Jones. In 1998, for example, 15.2% of lease transactions involved mortgage companies, compared with 7.3% during the first half of 2000 and 3.8% in the third quarter.
Jones says that demand for office and industrial space will remain strong in Orange County, even if some of the bigger players--like the dot-coms--should happen to go away. He predicts that bio-medical and financial services industries will continue to grow. "Even without Internet companies, the demand is still there--it may become consolidated or shift to financial or bio-medical, but it's not going away," Jones concludes.
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