Business Expansion Is Fueling Construction of Office Buildings

Despite higher lease rates, business expansion is steadily driving new office-building construction in Orange County.

Nearly 2.5 million square feet are under construction in the John Wayne Airport area and in South County, accounting for 91% of the area’s new office space, according to a new report by Voit Commercial Brokerage, a Woodland Hills firm.

“That’s where the demand is,” said Jerry Holdner, a Voit vice president. “The newer companies are moving there, the dot-coms and technology companies. That’s creating a need for offices to be built.”

In the first quarter, the amount of occupied office space grew by about 462,000 square feet over the year-earlier period, and vacancy rates remained below 10% countywide.

Two of the county’s largest commercial builders are banking on the need for more office space. McCarthy Construction in Newport Beach recently completed new Irvine headquarters for Nikken Inc., which sells health and nutrition products. And Koll Co. in Newport Beach soon will launch the second phase of Koll Center Irvine North, an eight-story building.