New office spaces are moving away from restrictive cubicles and embracing the versatility of open floor plans. ‘Modernized’ space enhances a company's ability to communicate with team members and clients while keeping a professional aesthetic. Because smaller companies are attempting to find modern space at a lower cost, office design is transforming.
Orange County is beginning to modify its office spaces to accommodate a large influx of technology and start-up companies in the area. Simon Dillon and Jason Katz of CBRE are leading the charge, and the TenantBase team had the opportunity to discuss the developing CRE landscape over a quick interview.
Dillon and Katz are both partners of the Orange County branch of CBRE, the world’s largest commercial real estate services and investment firm. Senior partner Dillon and partner Katz have been with the company since 1994 and 2012 respectively. During his time with CBRE, Simon has been recognized as a Top 25 producer for the Orange County region, while Katz was responsible for leasing of over 500,000 square feet of quality office space during 2013. The company offers many services including strategic advice for property sales and leasing, appraisal and valuation, and investment management. CBRE was founded in 1906 and has been incredibly successful: it has been included as a top company in Fortune 500 since 2008 and was named one of Fortune’s “Most Admired Companies” in the real estate sector four years in a row.
“Creative” office space is progressively becoming more prevalent in the workforce and is here to stay due the millennial generation. Younger business men and women entering the workforce prefer an open environment, and according to Journal of Environmental Psychology, they are going to be successful because of it. Since millennials will make up a majority of the US workforce in the next few years, office spaces have begun to transform to fit their needs and tastes.
The success of Silicon Valley created a vibrant startup community in need of various types of office space, but expensive prices caused companies to venture south for lower rent. The southward expansion created Silicon Beach in Los Angeles, but the increasing popularity and cost of this region is once again making smaller business move further south. Orange County is now receiving a large influx of startups that cannot afford rent in either of these costly locations. According to Katz, “Silicon Valley is Orange County, but just North of here”. Orange County could soon become Silicon County” due to the sheer volume of startups and the various resources it offers for small companies. CBRE identified this southward trend and has founded an office in Newport Beach along with creative spaces for companies. These creative spaces have and will continue to fulfill a large range of needs for clients.
It was in Los Angeles that senior partner Dillon first noticed the shift away from office spaces towards industrial spaces. “More tenants today understand the benefits of a more relaxed work environment,” he said. He took on his first modern office project at the site of a former packaging company. Noting that the space was not currently of value, he gutted the entire space and created a four unit space for four individual tenants, which quickly was leased with a 20-25% premium. “People now want a fun, collaborative environment,” he said. “There is a demand for it that has not quite caught up with the supply, but the future is going to be great.”
Similarly, Katz also gained much of his inspiration from LA, where he began his career. One of the largest influencing factors was the prominence millennials had since they are now projected to become over 50 percent of the workforce. “People want one place to work, live, and play without even getting in their car,” he said. “There is a fundamental shift in how people are working now.”