The Great Space Recalibration
Commercial
real estate in Southern California has always reflected the ebbs and flows of
business confidence.
Today,
across industrial buildings , office suites, and everything in between, we are
in the middle of what I call “The Great Space Recalibration.” Companies are
rethinking how much space they need, what kind of space they want, and how to
make their real estate align with a changed economic landscape.
Industrial:
From Expansion to Efficiency. For the past decade, industrial tenants in the Inland Empire
and Orange County raced to secure more square footage. E-commerce boomed,
imports through the ports surged, and vacancy rates fell to record lows. But
the story has shifted.
Instead
of expanding, many manufacturers and distributors are now optimizing.
Automation, robotics, and better inventory management allow them to do more
with less. A tenant that once needed 200,000 square feet may be comfortable in
150,000 if it’s more efficient space. Landlords, who grew accustomed to quick
leases and rising rents, are now negotiating harder and offering concessions
that were unthinkable just two years ago.
Office:
The Hybrid Question.
The office market has undergone an even more dramatic recalibration. Remote and
hybrid work are here to stay, and companies continue to evaluate their
footprints. In Orange County, for example, tenants are renewing—but often for
less space. A law firm that once leased three full floors may decide two is
sufficient, with one floor redesigned into collaborative areas and hot-desking
stations.
This
trend isn’t simply about cost savings. It reflects a cultural shift: offices
are no longer just places to house employees, but tools to attract talent and
foster collaboration. The most in-demand spaces are those that are flexible,
amenity-rich, and located in environments employees actually want to come to.
Retail:
Leaner but Smarter. Retail
has been recalibrating for years. E-commerce forced many stores to shrink their
footprints and focus on experiential elements that can’t be replicated online.
The winners are not necessarily the ones with the largest boxes but the ones
who integrate online and in-person sales seamlessly. Think of a
5,000-square-foot store doubling as a distribution hub, pickup center, and
brand experience all at once.
Why
This Matters. The
Great Space Recalibration has implications for everyone involved in commercial
real estate:
•
Occupants must carefully assess their true needs. More space is not always
better if it is underutilized or expensive to operate.
•
Owners must adapt to slower leasing cycles, more tenant scrutiny, and a greater
demand for flexibility.
•
Investors must look beyond raw square footage and ask: how usable, adaptable,
and future-proof is this space?
Looking
Ahead. If
the past decade was defined by expansion, the next may be defined by
efficiency. Companies are not retreating from real estate—they are
right-sizing. They are using space as a strategic tool rather than just an
overhead expense.
In
Southern California, where land is scarce, costs are high, and innovation is
constant, this recalibration may ultimately lead to a healthier balance.
Tenants will get the space they truly need. Owners will invest in making
buildings more flexible, sustainable, and tech-enabled. And communities will
benefit from properties that serve the market more intelligently.
The
Great Space Recalibration is not a crisis. It’s an adjustment. And like all
adjustments in real estate, it will reward those who recognize the shift early
and adapt accordingly.
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