The commercial real estate (CRE) market in Orange County, CA, is incredibly diverse and interesting for many different people. Property investors, for instance, often purchase CRE, either outright or through a commercial real estate investment trust (REIT), in order to earn from the rent of these properties. CRE is also interesting for business owners, who are looking for properties to use for their operations, such as offices, distribution, retail stores, and warehousing. They can choose to purchase their own real estate, making it an investment as well, or they can lease the property from the aforementioned property investors. Either way, it is very important to get to know the market before deciding to rent or lease.
Office properties usually cost around $311.66 per square foot in the entire county. This is a quarterly decline of 0.2%, although a 11.3% year on year rise.
If you are considering CRE, be that as an investment, a purchase for own use, or a lease, it is important that you truly get to know the market first. Every part of this country is driven by different economies, and you must be aware of these to ensure that you are able to achieve success in your own enterprises, whether it is business or investments.
Data Centers in Irvine
Interestingly, while most people think of Orange County for its affluence, and consider its economy based largely on tourism, it is actually about a lot more than that. One particular area of interest, for instance, is found in data centers, with Irvine, a city in Orange County, in particular seeming to be a hot bed for data centers.
The city has access to substantial fiber optics from numerous telecom providers and abundant power availability, and the data centers also serve the growing base of tech companies in the area.
Of course, data centers are just one small part of the overall commercial real estate market. In the quote above, it already eludes to another field that is growing in Orange County, which is the tech company market.
Tech Companies in Orange County
More and more large tech companies seem to be opening up offices here, and they tend to have very particular demands for their office buildings. Many companies, from Infor (based in New York) to Google (based in Silicon Valley), are completely transforming the inside of their buildings in order to turn them into “offices of the future”.
One area that seems to be responding to this in particular is the Greater Los Angeles area, which is often a precursor for developments in Orange County.
The Greater Los Angeles Basin industrial market delivered 11,257,600 SF of new industrial space while 14,779,100 SF of space remains under construction.
Again, these developments in the Greater Los Angeles area are driven by and large by tech company developments. Numerous financial reports have been released to highlight the growth of this sector, and the unique needs that it poses. Tech continues to be a relative new field of work, and it is redesigning the landscape of CRE and its demands. And with the outlook remaining very strong investing in CRE designed for tech companies could just be a very smart financial move.
Orange County’s economy is rapidly expanding, fueled by the expanding local technology sector. Startup and mature companies are drawn to the market’s highly educated labor pool and desirable lifestyle. The increasing number of local high-tech firms is adding new dynamics to the Orange County office market, including the growing inventory of creative space.
Shopping in Orange County
Naturally, Orange County is not solely about the tech market. This is convenient for many people, particularly investors, because tech companies tend to expect very big things, and they are inevitably very expensive. It also requires quite a lot of capital to form a startup tech company. But Orange County is also strongly about shopping, which is tied closely to the tourism industry. Hence, whether you want to start your own store, or whether you want to invest in retail CRE, you have a lot of solid options available in Orange County as well. Unfortunately, retail is becoming a tighter market in Orange County. This is in part due to changing economics. That said, if you have a good financial mind, you can use these changes to your advantage.
The future of retail closely aligns with the shifting demographics seen nationwide. As the middle class becomes smaller, pushing the population into the upper middle and lower income categories, the demand for retailers falls. A number of middle-tiered box tenants have exited the market due to over saturation and weak sales.
Irvine Co.
One other thing to look into in Orange County is what its overall trends are, also in terms of who owns property. We know that the tech industry is very interested in Orange County, that it is affluent, that the retail industry is harder to get into, and that the county relies heavily on tourism. One other thing to look into, therefore, is Irvine Co.
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.
Orange County is a fantastic area for investment in CRE and to build a business alike. It has shown very strong growth over the past few years, with people looking for bigger and better things, driving even more growth in the area. These are all very important factors to be aware of if you are to consider Orange County for yourself. You must, if you want to invest, thing about whether you can purchase a property and become a landlord, or whether you want to opt for a REIT. And, if you want to start your own business, you will have to think about whether you want to buy or lease it.
