Ingham says the lack of buildings being developed that are more than 10 stories indicate has to do with the risk profile. It's pretty risky to build a 300,000-square-foot building, then have to lease it up. The cost per square foot is generally higher for high-rise buildings.” Also, tenants aren't gravitating toward high-rises as much as in the past, particularly in Orange County, which tends to be more campus oriented. “The demand is going to amenity-rich areas and then campuses,” says Ingham.

From the investor perspective, Orange County office buyers are especially interested in core assets, after which they are chasing rather aggressively. Some buildings with smaller floor plates have actually been pulled from the sales market so the sellers could improve them before putting them back on the market, but generally speaking, Ingham says there is definitely demand for purchasing because there's so much capital chasing after not enough transactions.

One amenity that has really taken hold in the Orange County market is outdoor space, largely due to the mild weather in this region for most of the year. I was in Arizona last week, and everyone was showing outdoor space,” says Ingham. “In other parts of the country, there are months of the year where people can't use outdoor space, but here we can use it pretty much 365 days a year.”

He points out that in a campus setting, employees can meet and take breaks outside here versus in parts of the country, which drives low- or mid-rise space here. “It's hard to get in elevator, ride down to the first floor, bring my laptop and sit outside. But if I work on the first floor, I can do that.” Technology—particularly Wi-Fi—also drives the use for outdoor space so that people can work from virtually everywhere on a campus. And having a more open-plan office space, as many companies do now, makes you want to work in different areas—even outside, which can provide an additional type of “office space” for private or personal calls.

While we've seen a lot of redevelopment of older buildings we have seen increased demand for industrial buildings being converted to office space in this market, particularly as industrial sites are being converted to residential, says Ingham. “This is going back to the risk profile on office: ground-up development is much riskier than renovation of existing project.”

IRVINE, CA—Drivers of outdoor office amenities, particularly in Orange County, range from clement weather most of the year to open floor plans and technology itself, JLL senior managing director Jeff Ingham tells GlobeSt.com. All of these drivers enable amenities that make Orange County office assets even more appealing to tenants and investors.

The market is especially strong. According to the firm's Q3 office report, sales volume has picked up, and so has pricing. In 2016, volume totaled $1.7 billion, compared to a year-to-date total of $1.9 billion. Average sales price has climbed 12.9% to $280 per square foot, with the number of transactions of at least $350 per square foot doubling from four to eight.

The report also revealed that as the tenant mix continues to diversify in Orange County, flexible-office space is playing a significant role in this change. Including executive suites and co-working operators, there are more than 50 flexible-office locations totaling approximately one million square feet, half of which is located in the Airport Area.

The evolution of the local office market is also noticeable based on new development activity. Of the class-A buildings already completed in 2017 and those currently under construction, only one consists of more than 10 stories, compared to six properties delivered in 2007 and 2008.

Ingham says the lack of buildings being developed that are more than 10 stories indicate has to do with the risk profile. It's pretty risky to build a 300,000-square-foot building, then have to lease it up. The cost per square foot is generally higher for high-rise buildings.” Also, tenants aren't gravitating toward high-rises as much as in the past, particularly in Orange County, which tends to be more campus oriented. “The demand is going to amenity-rich areas and then campuses,” says Ingham.

From the investor perspective, Orange County office buyers are especially interested in core assets, after which they are chasing rather aggressively. Some buildings with smaller floor plates have actually been pulled from the sales market so the sellers could improve them before putting them back on the market, but generally speaking, Ingham says there is definitely demand for purchasing because there's so much capital chasing after not enough transactions.

One amenity that has really taken hold in the Orange County market is outdoor space, largely due to the mild weather in this region for most of the year. I was in Arizona last week, and everyone was showing outdoor space,” says Ingham. “In other parts of the country, there are months of the year where people can't use outdoor space, but here we can use it pretty much 365 days a year.”

He points out that in a campus setting, employees can meet and take breaks outside here versus in parts of the country, which drives low- or mid-rise space here. “It's hard to get in elevator, ride down to the first floor, bring my laptop and sit outside. But if I work on the first floor, I can do that.” Technology—particularly Wi-Fi—also drives the use for outdoor space so that people can work from virtually everywhere on a campus. And having a more open-plan office space, as many companies do now, makes you want to work in different areas—even outside, which can provide an additional type of “office space” for private or personal calls.

While we've seen a lot of redevelopment of older buildings we have seen increased demand for industrial buildings being converted to office space in this market, particularly as industrial sites are being converted to residential, says Ingham. “This is going back to the risk profile on office: ground-up development is much riskier than renovation of existing project.”