Flex-Tech Buildings Fetching Higher Rates

The two-story buildings known as flex-tech have grown popular as a cheaper alternative to traditional offices, allowing companies to create a campus-like environment.

Technology firms and traditional office users, such as law firms and mortgage companies, have helped push up prices in that segment 10% to a record $1.55 per square foot in Orange County.

In the higher-rent Irvine Spectrum business park, costs have risen to about $1.75, according to a new report by Grubb & Ellis Co. Cleaning fees and utilities could add about 40 cents to those rates, shrinking the wide price gap between traditional office space and flex-tech.

Traditional office space runs $2.10 a square foot in the county overall to $2.20 in the Spectrum.

Vacancy rates in flex-tech have declined to 16% from 23% earlier this year despite a flood of new development. About 1 million square feet has been absorbed this year, said Scott Read, a senior vice president at Grubb & Ellis.

Read said that significantly more space should be taken up this year and rates should move even higher.

Daryl Strickland covers real estate for The Times. He can be reached at (714) 966-5670 and at daryl.strickland@latimes.com.