NKF’s Greg May Previews Connect Orange County

Connect Orange County is just around the corner. In case you didn’t know, it is just about the biggest CRE gathering in SoCal. You can still register on this link: Connect Orange County.

As we gear up to gather at The Boardwalk in Irvine on Sept. 25th, Connect Media asked one of the key speakers slated to participate in the conference to share insights about the market. Check out a synopsis of Orange County by NKF’s Greg May, EVP, Regional Managing Director, in our latest 3 CRE Q&A.

Q: What are the Big Orange County Market Trends you are Watching?

A: Landlords of most product types are making a significant shift to better understand their tenants’ needs and the way they think about them as their “customers.” Irvine Company has been calling its tenants customers longer than any other landlord in OC, but this is the general shift when thinking about retention with a huge emphasis on customer service. We have seen prolific developers in retail, like Rick Caruso, that were ahead of the curve in creating experiential retail … now office landlords are realizing they need to apply the same for attracting the best tenants and retaining them. Co-working locations have popped up to solve for sense of place, but we are now seeing landlords like EQ Office make license agreements with groups like Industrious at Howard Hughes in LA to partner with them for managing/operating some of the project amenities.

Q: What is Tenant Demand like and what is Investor Demand like?

A: Tenant demand is substantial, and there is a lot of optimism and confidence in the marketplace. We have seen tenants making big moves to upgrade space and expand, but with corporate M&A activity happening, there are still some large blocks of vacant space available. I believe we will be seeing more demand from Silicon Valley companies because Orange County is a great place to work and live, and rents are about 30 to 35% less than comparable Silicon Valley product.

Investor demand and interest is strong. Investors like that office assets here offer significant rental and redevelopment upside. As testimony to that, our NKF Capital Markets team has closed nine transactions valued at over $675 million, with another five under contract totaling about $173 million in OC this year alone.

Q: What do you see ahead for the balance of 2018?

A: I see a healthy market, with continued strong tenant and investor demand. I think people have been smart not to overbuild because vacancy will continue to tighten and we won’t find ourselves in an oversupply situation.

For comments, questions or concerns, please contact Dennis Kaiser