Creative office space is a movement, not just a trend, with a very broad range of users. At least that's what Cypress Office Properties principal Mark Wayne tells us. Hear from Mark and an all-star cast of luminaries about the latest trends in the market at Bisnow's San Diego State of the Market event on Jan. 12, at the Hilton San Diego Bayfront Hotel, beginning at 8am.
Mark tells us for many companies, the days of everyone in a private office are over, even for old-school tenants, such as law firms and industrial users. Everyone just wants a “cool vibe and collaborative environment.”
Mark, whose company is focused on acquisition and asset management of value-add, core plus, and redevelopment office properties in key Southwest markets (think San Diego, Orange County and Phoenix), says office properties in some San Diego submarkets, like Del Mar Heights and UTC/La Jolla, are achieving record peak rents.
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For example, Mark notes in Del Mar Heights, Class-B rents are now in the $3.50 to $4/SF range (net of electric) and Class-A rents are in the $4 to $4.75/SF range (net of electric). During the last cycle, the same buildings were 10% to 15% below the current levels.
Mark says creative space can often command a premium over traditional space, if nothing else because there's a lower supply and firms are more likely to select space that will retain and attract quality employees.
"If a property does not currently have creative space but has the potential, it may command a rent premium when converting it to this creative open design," he says.
(Pictured is an office space that was converted to creative office at Scripps Plaza in the Scripps Ranch submarket.)
Mark says the high demand and premium rents for creative space are pushing developers to renovate and convert traditional office buildings and R&D facilities for creative users. “This is not just for Millennials,” he says. “Even us old guys are interested in cool spaces.”
Hear more at Bisnow's San Diego State of the Market event on Jan. 12, at the Hilton San Diego Bayfront Hotel, beginning at 8am. Sign up here!
