Off the 405 Freeway in Irvine, hundreds of workers are busy erecting a 20-story glass office tower, a stark symbol of Orange County’s economic expansion.
This year, the county is expected to add the most new jobs in 17 years, outpacing the growth rate of California and the nation. Businesses are leasing so much space that the county’s biggest landlord is running out of offices to offer tenants.
“We have customers that we can’t accommodate, because we are so full,” said Irvine Co. office executive Steven M. Case. “That is the premise of building this building.”
The construction of 200 Spectrum Center, which will be the county’s largest building, underscores a local economy that’s finally revving into high gear, following a recession that decimated two of its leading industries: construction and the mortgage business. It took the state’s third most populous county until March to regain all the jobs lost during the downturn.
But now, growth is outpacing many other areas. During the first half of the year, employment grew 3.3% compared with a year earlier, led by strong gains in the generally well-paying professional and business services sector, as well as healthcare and construction. Of the state’s major job markets, only the Silicon Valley and the Inland Empire saw stronger growth.
The Affordable Care Act and an aging population are creating jobs in healthcare, while the national economic recovery is boosting demand for business services and local tourism, said Esmael Adibi, director of Chapman University’s A. Gary Anderson Center for Economic Research.
Meanwhile, real estate has turned from a drag into a positive, and overall job creation is gaining momentum.
“The economy of Orange County is doing extremely well,” Adibi said.
“It’s a place that should be growing. It’s a wealthy place. It’s a highly educated place,” he said. “I wouldn’t be surprised to see better numbers coming out of there the next couple of years.”
Among the businesses expanding are Irvine direct lender Balboa Capital, which serves small businesses across the country.
Chief Executive Patrick Byrne said smaller firms are increasingly seeking loans as the economy improves, leading to a 77% jump in Balboa’s business last quarter. To accommodate the surge, Balboa hired 155 employees in Irvine over the last year and nearly doubled the amount of square footage it has near John Wayne Airport.
“Small businesses are doing better,” Byrne said. “We are really busy.”
Expansions like Balboa’s are transforming Orange County’s office market into a top performer. So far this year, firms have absorbed more space than in the far larger Los Angeles County market, according to commercial real estate brokerage CBRE Group Inc.
The vacancy rate in Orange County stood at 9.2% during the second quarter, compared with 15.3% in Los Angeles County and 12.6% in San Diego County, according to CBRE.
Demand is coming from multiple industries, making the area less reliant on real estate than it was during the housing bubble, said Kurt Strasmann, senior managing director of CBRE’s
Orange County region.
“It’s an amazingly diversified recovery,” Strasmann said.
Technology is one of those sectors, he said.
“We were on top of each other like ants at the old place,” said Acorns co-founder Walter Cruttenden. “The app took off faster than we expected, so we just grew faster than we thought and had to hire people.”
The rebounding economy has also boosted the real estate industry and revived long-stalled home projects, such as San Juan Capistrano’s Pacifica San Juan. The construction industry, previously decimated by the recession, saw employment jump 6.8% last year, and job creation should climb an additional 4.4% this year, according to a forecast from Chapman University.
Trilogy Plumbing in Anaheim has added about 40 workers in the last 18 months, President David Keefe said. The company
noticed an increase in new home jobs two years ago, but experienced a sizable jump in the second quarter of 2015.
“The economy has definitely picked up the housing sector,” he said. “That’s really allowed us to invest in our infrastructure and our people.”
New office projects are in the mix as well.
Developer Trammell Crow Co., which is owned by CBRE, recently bought 7.5 acres near John Wayne Airport and plans to open a 545,000-square-foot office project there in 2017.
And last month, Tustin entered into a negotiating agreement with Lincoln Property Co. to build a nearly 900,000-square-foot office campus at the former Marine Corps Air Station.
“There are going to be a lot of new buildings coming out of the ground,” said Jeff Ingham, senior managing director for JLL’s Orange County office.
One is in the Irvine Spectrum. There, about 220 workers are preparing the Irvine Co.’s new office tower for a spring 2016 opening.
With high ceilings and floor-to-ceiling windows, it was designed by Pei Cobb Freed & Partners, the firm behind the U.S. Bank Tower in downtown L.A., the expansion of the Louvre and the headquarters of Goldman Sachs in New York City. The top floors offer sweeping views of suburban Irvine and rolling golden hills.
In a testament to the Irvine Co.’s confidence in the Orange County economy, it’s building the tower without tenants lined up, and it comes after the company opened two other office towers last year in nearby Newport Center.
There’s more in the works. The master developer is seeking city approvals to build a 20-story office building down the block from the one now under construction.
Case, executive vice president of office properties, said the Irvine Co. will see how 200 Spectrum Center leases before setting a groundbreaking date for its next building.
But if demand is as strong as expected, another tower may not be far off.
“We could break ground as soon as next year,” Case said.