Why Retail is Driving Office Rents in OC
As the modern worker looks for more local amenities, OC rents are rising at buildings near high-quality retail. But there's more to it, JLL SVP Jay Nugent tells us.
Jay (snapped with son Garrett and daughters Julia and Chatham on Lake Havasu) says the nicest office buildings just tend to be part of retail developments—such as Fashion Island, Irvine Spectrum and South Coast Plaza—and the fit and finish of many of those buildings demands premium rents.
That, coupled with the strong demand to be adjacent to retail, gives many of those landlords the ability to push rents. "OC has always been more of a suburban marketplace where people have to get in their cars to get access to retail," Jay explains. Employers now realize that having offices in walking distance of retail not only helps with recruitment and employee productivity, but retaining employees as well, which is critical when the unemployment rate is relatively low.
JJL recently compiled data that demonstrates the impact that retail has on office rents in OC. Office space near Fashion Island, for instance, commands a nearly 120% premium compared with the rest of its submarket; near the Irvine Spectrum Center, more than 53%; and South Coast Plaza, almost 36%.