California

By Bob Caudill, Executive Vice President, Colliers We continue to see a flight by tenants into low-rise office properties, typically four stories or less, and out of high rises. This trend began pre-pandemic, but COVID has undoubtedly accelerated its movement. Asking rates in the market have flattened, while concessions like free rent, beneficial occupancy and improvement allowances have increased. The surge in construction costs continues, putting stress on the economics of lease deals. In addition, construction material delivery delays have impacted the completion of tenant improvements. We will continue to see challenging times for office owners in the short-term as tenants are unsure how much space they need going forward. More tenants will also struggle to pay rent on time. In the long-term, although some industries have learned that they can remain successful with most of their employees working remotely, others are experiencing negative impacts on creativity and collaboration. As a result, their businesses have suffered financially, and they will require their employees to return to the office. Activity and Impact  The Irvine Company’s Spectrum Terrace has set a new standard in design and quality for low-rise, Class A office properties. Tenants in this project are creating a workplace environment that employees will want …