IT companies resume their activities

After two years of uncertainty, Orange County employees are returning to the office.

This is good news for tenant improvement contractors as landlords and businesses look to spruce up their space to attract and retain staff.

“There’s a lot of office work on the books in Orange County,” said Esplanade builders CEO Christian Sorensonwhose business works with large acreage owners, including Irvine Company.

“Local landlords are hitting the target of what tenants want by building campus-style low-rise buildings,” Sorenson added. “That’s why the OC market is strong, outpacing markets like Los Angeles where high-rise buildings are the norm.”

This employee feedback has also helped offset some renewed industry headwinds like inflation and longer delivery times for materials, prompting some clients to be conservative in their renovation or remodeling plans.

“It’s a very expensive time to be in the construction industry,” said RBA inc. CEO Bob Anderson.

Still, local businesses have seen a return to industry gains in 2021 after seeing business drop 12% in 2020.

Orange County’s top 25 contractor tenants saw a 1.3% increase in business last year, with total billings of $1.3 billion.

It’s still below pre-pandemic levels – 2019 brought an almost 30% increase in activity compared to 2018 – but the return of consumer confidence last year has set an optimistic tone. to local businesses.
“Surviving 2020 was a feat in itself,” said Anderson, whose Huntington Beach company saw its business grow to $33 million last year, good for No. 13 on the list.

Including Esplanade No. 8 and RBA, 15 companies on this week’s list saw business grow in 2021, compared to just seven in 2020.

The right product

Although OC’s total office vacancy rate climbed to 16.2% in the first quarter of 2022, from 15.9% the previous year, some submarkets are benefiting from a faster return as part of a trend of “flight to quality” that has persisted since the start of the pandemic.

This is especially true in Irvine’s Spectrum submarket, where Irvine Co. has been successful in securing tenants for its new office campuses.

“The new construction has been well received, given the full lease of the first and second phases of Spectrum Terrace,” according to a report from the Irvine office of Newmark. “The first stage of Innovation office park delivered last year and is currently 53% let”.

Much of Esplanade’s local office work stems from contracts with Irvine Co., which includes tenant builds at Spectrum Terrace and Innovation Office Park.

“It’s the right product for what tenants are looking for: new, highly serviced office campuses,” Sorenson said.

In addition to office work, Esplanade is staying busy and mitigating market uncertainty by investing in industrial work in OC and the Inland Empire.

“We’re watching the economy closely, which is part of why we’re putting so many eggs in the industrial basket,” Sorenson said. “Prices for materials and equipment have risen dramatically, coupled with labor shortages and competition…it’s a tough environment. »

Great demand for small jobs

These headwinds have led to some industry consolidation, Anderson notes.

“It eliminated some of the smaller entrepreneurs, which I don’t think is good for the economy,” Anderson said. “Customers with small jobs have a hard time finding someone to call them back. Many of these entrepreneurs have gone out of business.

RBA said it has taken on more one-off works or small maintenance projects to help fill this gap.

“We have a division that handles smaller jobs, called special projects, which I think will get busier and busier over the next few years.”

The return of tourism and hospitality has helped bolster the business of RBA, which has major OC theme parks among its client roster.

The biggest boost in the list was seen at Morris Constructionone of two newcomers to this year’s list, which saw its business increase by 174%.

The company primarily focused on healthcare contracts when it started in 2012, but began branching out into different sectors in 2017, including life sciences, manufacturing and automotive installations.

“Diversifying and balancing our portfolio has really paid off,” the president said. Chris Morris said.

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