Three banks have re-upped their office leases for a combined 300,000 square feet in Irvine, marking some of the larger new leases in Orange County.
Pacific Premier Bancorp, JPMorgan Chase, Wells Fargo each recommitted to their offices, bucking a local trend of tenants seeking to downsize to offices smaller than 20,000 square feet, the Orange County Business Journal reported, citing CBRE and Cushman & Wakefield.
All of the renewals came in the Irvine Business Complex, which sits within the John Wayne Airport-area submarket.
Pacific Premier, based in the city, renewed a 115,400-square-foot office lease at its headquarters at 17901 Von Karman Avenue. The bank takes up half the 12-story tower, whose landlord was not disclosed.
New York-based JPMorgan renewed 173,200 square feet of offices at 3 and 5 Park Plaza, owned by the Irvine Company.
Wells Fargo, based in San Francisco, renewed 53,000 square feet of offices at 2030 Main Street, countering the larger trend of what CEO Charles William Scharf dubbed a “lumpy” office market nationally.
“In our commercial portfolios, losses continued to be driven by commercial real estate office properties, where we expect losses to remain lumpy,” Scharf said during a second quarter earnings call.
“Fundamentals in the institutional owned office real estate market continued to deteriorate as lower appraisals reflect the weak leasing market in many large metropolitan areas across the country.”
Orange County has been taking some of the lumps, with recent leasing relatively weak, according to the Business Journal.
Businesses in the region “don’t need as much space as they once did,” according to a CoStar analysis of Orange County’s office market last quarter.
“Office tenants are more frequently leasing smaller-sized office suites in the area, and just a few leases for over 50,000 square feet of office space have been signed this year, a slowdown from the more than 10 inked last year and an average of 20 signed annually in the past decade,” Jesse Gundersheim, a researcher with CoStar, stated in the analysis.
Leasing activity for offices between 20,000 and 50,000 square feet has been slow, with 30 such deals signed this year — down from the more than 50 such deals signed for both 2022 and 2023, he said.
Year-to-date leasing volume for offices of 20,000 square feet or more made up 19 percent of all leasing activity — a “historical low.”
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At the same time, JLL found OC leasing volume rose 5 percent last third quarter, compared to the previous three-month period, with lease renewals dominating the market.
This month, Mountain View-based Google renewed its lease for 196,200 square feet of offices at the two-building office campus at 19510 and 19520 Jamboree Road, in Irvine.
— Dana Bartholomew