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Those big buildings in O.C.: 7 notable trends

Those big buildings in O.C.: 7 notable trends

Commercial real estate is big business in Orange County.

So when market tracker Jared Dienstag recently joined JLL’s local brokerage office after serving in a similar role at Cushman & Wakefield, we asked what struck him as intriguing about all those giant buildings around Orange County.

Here’s seven noteworthy commercial real estate trends gleaned from our discussion with Dienstag, a graduate of American University in Washington, D.C.


Need a local office? It’s hard to ignore the Irvine Co.

Billionaire Donald Bren’s real estate empire controls 18 million square feet of Orange County office space; that’s 23.7 percent of all the available inventory of Orange County offices.

Dienstag puts the dominance another way: Irvine Co. owns more local offices than what’s controlled by all the other members of the market’s top 10 office landlords, in order: Equity Office, Hines, Greenlaw Partners, Olen, LBA Realty, CJ Segerstrom & Sons, TA Realty, Deutsche Bank AG and the Colton Co.


Hines, a real estate investment company in Houston, has been the county’s most prolific deal-maker this year.

Hines has become the third-largest office landlord in Orange County by buying and/or selling more Class A office space than anybody else – 980,000 square feet.

That trading volume is equal to more offices than would fit in the two new Irvine Spectrum towers.


Orange County looks affordable to business within Southern California, by one metric of business expense.

Total all-in cost per employee – combining real estate and wages – is lower in Orange County ($ 99,524 a year) than in Los Angeles ($ 107,340) and San Diego ($ 112,189).

Of course, you can go wild on the office budget in Orange County. When JLL recently ranked the “most expensive streets” for office space in the nation, Newport Beach’s Newport Center Drive ranked 10th at $ 52 a square foot per month.

Los Angeles’ Avenue of the Stars ranked eighth at $ 63 per square foot; San Diego’s El Camino Real in Del Mar Heights was 12th at $ 46 a square foot.

Priciest? Menlo Park’s Sand Hill Road at $ 142.


Yes, the Orange County office landlords have filled 7.1 million square feet of space since the start of 2011.

And, yes, that leasing spree more than wipes out the loss of 6.4 million square feet that occurred beforehand – during and after the Great Recession (2007 through 2010).

What’s not back yet are rents.

At top-shelf Class A buildings, JLL says average asking rents are still 14 percent below 2007 levels. In second-tier Class B properties, rents are still down 11 percent.


With apartment rents on the rise, new complexes are popping up.

Orange County added 23 new multifamily projects since the start of 2012 – market-rent apartments with at least 100 units.

JLL says those developments added 9,246 units to the overall apartment supply, or a 6.7 percent boost in choices for renters. In addition, 8,116 units are under construction.

Maybe there’s hope for frustrated apartment seekers after all.


Buyers of Orange County retail properties apparently have large appetites for space.

The average size of a retail property transaction completed in Orange County this year is 18,597 square feet, more than twice the average size of Los Angeles County at 7,897 square feet. As a rough comparison, that’s a size difference between a typical stand-alone drugstore vs. a common full-service restaurant.

Why? Dienstag says the typical Orange County buyer targets shopping centers or single-tenant properties near a major center, while in Los Angeles it’s the smaller, pedestrian-friendly “street” locations that are popular.


Just 3.1 percent of Orange County industrial space – that’s warehouses and factories – is vacant. That’s less than half of the U.S. vacancy rate of 6.7 percent.

And companies pay handsomely to be here: Typical local industrial rent is 67 cents per square foot a month vs. 41 cents nationwide.

Why? To Dienstag, the trends are from “the strong desire of local firms wanting to maintain their presence in Orange County.”

Contact the writer: jlansner@ocregister.com

The Orange County Register – News Headlines : Real Estate News