Tenants Working Around Lack of Creative Space

Saia: “Companies who are in more-traditional office buildings are redesigning their layouts.”

ORANGE COUNTY, CA—Just because there isn’t a lot of creative product in the Orange County market at this time doesn’t mean tenants don’t have options, CBRE senior research analyst Max Saia tells GlobeSt.com. In fact, according to a recent report from the firm, developers are betting big on creative space in Orange County. This is a market not known for having a lot of creative-office product, but due to evolving workplace strategies, tenants are pursuing the best possible space in order to attract and retain talent. We spoke exclusively with Saia and first VP Garrett Ellis about how Orange County tenants are dealing with the lack of available creative-office space. GlobeSt.com:  How is the lack of available creative-office space impacting tenants’ choices in Orange County? Saia: Just because there isn’t a lot of creative product in the market at this time doesn’t mean tenants don’t have options. There is a lot of high-quality space in Orange County. Much of it features aspects of the more modern creative build-outs that are starting to be developed in this area. But at the end of the day, we need a lot more of this kind of forward-thinking space to attract and to keep companies in Orange County. Ellis: Tenants of today are increasingly picky about the workspaces they want to be in. This has made landlords more willing to reconfigure their traditional office spaces to attract high-quality companies. There is a good amount of creative-office space available throughout Orange County, but in order to keep the area competitive with other markets, we do need more of this kind of innovative space. Amenities are the key that turns the ignition for a dynamic workspace. There is great demand for readily available “creative” space near places such as restaurants or shopping centers , and the lack thereof is pushing rents higher.

Ellis: “While not everyone is looking for concrete floors and open ceilings, the vast majority of companies is shying away from the soul-crushing office space of yesterday.”

GlobeSt.com: How are tenants who are seeking creative space to attract and retain talent adapting to this lack of availability in the market? Saia: From a workplace-strategy perspective, tenants are still quite capable of upgrading their space to attract and retain talent. Companies who are in more-traditional office buildings are redesigning their layouts. The main improvements we are seeing across the board are more collaborative spaces and integration of natural light, as well as the incorporation of wellness and concierge services. These elements are crucial for employee happiness, talent retention and fostering creativity and collaboration. Ellis: While not everyone is looking for concrete floors and open ceilings, the vast majority of companies is shying away from the soul-crushing office space of yesterday. The profile of the typical Orange County office tenant seeking out “creative” space has undergone a significant shift over the past cycle. Today, companies across all industries, ranging anywhere from tech to accounting, are looking to creative space to attract and retain the highest-quality labor force. That means that tenants in even more traditional offices are aiming to convert their spaces to be more collaborative and well-designed. GlobeSt.com: Which submarkets show the most promise for developing this type of space? Saia: We continue to view the Greater Airport Area and South Orange County as the in-demand submarkets. Vacancy rates are low in these markets, and developers are positioning themselves in each of these areas accordingly. An abundance of amenities, combined with the proximity to housing and transportation, create an environment in which tenants want to be. Ellis: The Greater Airport Area and South Orange County are the in-demand submarkets, but the phenomenon is spreading throughout the entire county. This is driven by the fact that even more-traditional companies are becoming more open to the concept of converting their working environments into more forward-thinking spaces. The presence of tech-related companies and the availability of newer flexible buildings has made the Irvine Spectrum area a particularly popular submarket. GlobeSt.com: What else should our readers know about the Orange County creative-office market? Saia: The economy in Orange County has evolved and diversified and is much different now than it has been in the past. Finance plays a smaller role in office demand, and tech tenants are a bigger part of the picture now. Overall, with strong employment growth and an emerging tech industry, competition for talent in the market is high. These trends will continue to drive demand for creative office moving forward. Ellis: Orange County is a true value play for companies looking for creative-office space. We tend to see creative-office rates in Orange County at a discount as compared with most areas in Los Angeles. Tech tenants are increasingly attracted to this area, which will help drive the growth of creative-office product. What Orange County generally lacks is an abundance of historic buildings you tend to find in urban areas such as Downtown Los Angeles and San Francisco. Ultimately, we see companies attracted to this area embracing Orange County’s advantages: open space to enjoy the pleasant year-round weather and newer efficient buildings.