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December 18, 2018
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Orange County Office Experts Share 2016 Outlook at RENTV’s State of the Market Conference

2/09/16

The office market session at RENTV’s recent Orange County State of the Market Conference on January 28 at the Hilton Airport in Irvine boasted an all-star panel of industry experts, including: John Drachman, President at Stillwater Investment Group; Rob Rader, Vice President at Wind Water Realty; K.C. Scheipe, Managing Director at Eastdil Secured; Drew Huffman, Associate at Hines; and the moderator, Anthony DeLorenzo, First VP at CBRE.

As a group, the panelists concurred that Orange County’s office market has staged a strong comeback from the recession, due in great part to a number of significant economic drivers. Currently, the region has one of the lowest unemployment rates in the state and benefits from growth in multiple industries, including technology, healthcare and hospitality, all of which are booming right now.

Left to right: Drachman, Rader, DeLorenzo, Scheipe, Huffman
Left to right: Drachman, Rader, DeLorenzo, Scheipe, Huffman
Commenting on how today’s office market in Orange County differs from before the recession, Drachman pointed out that the new supply coming on the market is very different than the existing product, which is necessary to meet changing tenants’ needs. This includes such base building characteristics as floorplates and parking. Because of these changes, coupled with greater capital choices than just two years ago, more and more of the region’s older office product, from the 1980s and earlier, is being viewed as opportunities for significant value-add buys.

Continuing on the topic of office investment in the region, Schiepe commented that he was seeing more capital being pushed into the suburbs. He also noted that pension fund allocations to real estate as an investment class was increasing.

The panelists shared a positive outlook for the region and were generally in agreement that the current cycle still has a ways to go, although estimates on how long that might be varied. Scheipe suggested that the market still has “runway” for another two or three years, and that cap rates should remain low over that time.

Huffman pointed out that per Hines’ research, Orange County has the strongest rent growth of all the US markets they track, and is probably about halfway through the current cycle. Rader agreed, suggesting that many investors view California real estate in general as a safe place to have capital invested right now.





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