IRVINE, CA—Compared to other markets across the country, specifically New York and San Francisco, Orange County is still a great deal according to institutional investors, Newmark Grubb Knight Frank's executive managing director, investment services, Robert Griffith tells GlobeSt.com. We spoke with Griffith exclusively about the trends he's seeing in office construction and how Orange County is seen by investors.

GlobeSt.com: What trends are you seeing in the type of office construction planned or in the pipeline? 

Griffith: The biggest trend we have seen has been the growth of creative-office-style product. Additionally, we have seen an increased amount of interest in creative office regardless of the user type. What once were office buildings with window offices and interior cubicles bustling with formally dressed lawyers and financial-service professionals are now 24/7-style campuses with open floor plates, amenity-rich environments where jeans-and-T-shirt-dressed engineers can sit with their laptop or iPad and work from a beanbag along the window line.

A number of industrial conversions as well as ground-up creative-office projects are set to commence construction and be delivered in 2016. Large floor plates designed for collaborative working environments and on-site indoor and outdoor amenities are a must. Pet-friendly environments are growing in popularity. In many creative-office properties, valet service—which often includes gas refilling and dry-cleaning services—is on the brink of becoming the norm. Parking must be plentiful, and electric-vehicle charging stations are also important. The type of creative office traditionally seen in L.A.'s Westside is now making its way to Orange County, but at much more affordable prices. CapRock's 110,000-square-foot Radius building in Tustin is a good example of where office construction is heading.

GlobeSt.com: Despite rising sale prices, are investors still viewing Orange County office as a bargain compared to other markets throughout the country like New York and the Bay Area? 

Griffith: Generally speaking, institutional investors still view the Orange County office market as a bargain compared to other markets across the country—specifically New York and San Francisco. Considering a number of recent class-A office sales traded in the $350-to-$380-per-square-foot range, the perception is that Orange County is a long-term value play. With favorable future rent growth and anticipated continued job growth, it will continue to be a good place to be invested.

Per-square-foot averages of office buildings in major markets have, or are shortly expected to, exceed the prior peak in 2008. For more perspective, New York City sale prices are currently 14.6% above the Q2 2008 previous high, averaging $973 per square foot. San Francisco average-square-foot price was $780 at the end of the third quarter.

At $27.24 per square foot, asking rents in Orange County remain 17.9% below the market peak in 2007. This compares to $70.99 per square foot for Manhattan asking rents, which remain 6.9% below the market peak in 2008. San Francisco rents were $67.11 per square foot at the end of the third quarter.

GlobeSt.com: From where are new pockets of foreign investment in Orange County emerging? 

Griffith:Mostly Asia, and they usually find their home in the form of a joint venture. Here is a chart that shows this in more detail:

Source: Real Capital Analytics, Newmark Grubb Knight Frank

GlobeSt.com: What else should our readers know about the Orange County office sector? 

Griffith:Out of all Southern California counties, Orange County has the lowest office vacancy rate, at 11.3%. Furthermore, in the past two years Orange County office rents have the sixth-fastest growth in the nation, only behind Silicon Valley, San Francisco, Manhattan, Seattle and Houston. This is helping sale activity. NGKF's Q3 market report states: “Spurred by solid leasing fundamentals, Orange County office sales volume reached its highest level since 2007, as sales volume year-to-date totaled $1.9 billion. Third-quarter sales volume totaled $749 million—just shy of the $757 million in the second quarter, but nearly double the $386 million seen in the first quarter. The market only needs to record $330 million in sales volume during the fourth quarter to set a new all-time record."