Steve Economos believes the $600 million-plus Dana Point Harbor revitalization and the 2028 Los Angeles Olympics surfing events at Trestles Beach could help energize an overlooked part of South Orange County’s economy: its office market.
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Dana Point and San Clemente have relatively little Class A office space, generally considered the top tier of commercial office buildings.
Economos, co-founder of the Newport Beach-based boutique firm Economos DeWolf, has been tracking Orange County commercial real estate for more than three decades. He sees the shortage as an opportunity amid changing post-pandemic work patterns, population shifts and new investment. The shortage is evident in the numbers. A CoStar scan found just one Class A building available between the two cities, compared with 33 in Newport Beach.
“I think a lot of this is forthcoming,” he said. “The harbor isn’t finished. The Olympics haven’t happened yet. I’m looking a few years down the road.”
The potential for growth comes as South OC’s luxury residential market reaches new heights. A Laguna Beach mansion in Emerald Bay recently sold for a county-record $110 million, followed by a $60 million listing in The Strand at Headlands in Dana Point.
“These numbers were unheard of not too many years ago,” Economos said, adding that he expects the influx of wealthy residents to create demand for services closer to home, such as attorneys and financial planners.
During a recent conversation with the Southern California News Group, Economos discussed where capital is flowing, which kind of office space is emerging as an early area of growth and why he believes property values in Dana Point and San Clemente are poised to rise. The interview has been edited for length and clarity.
Q: What is driving the future of the office market in Dana Point and San Clemente?
A: You have all the attention on the harbor. Surfing in 2028 is going to bring global eyeballs to the beautiful little beach town of San Clemente that’s been off everybody’s radar. There’s going to be attention on those two towns they haven’t had previously.
On the coastal side … thousands of residents that weren’t there before are now down in South Orange County. People aren’t as inclined to go to a central business district as they used to have to do. So, why wouldn’t some of these high-end CPAs and state attorneys, financial planners, want an office now down in deep South Orange County?
We have seen a little surge on the medical side, where major hospitals are building outpatient clinics off campus. In San Clemente, Providence, which is Mission Hospital’s parent, just did a site at the outlet. Hoag took over an Office Depot. It looks like a Four Seasons. I guess that’s their model — making these really beautiful facilities, where you don’t feel like you’re walking into a sterile emergency room. With the aging of the Baby Boomers, we’re going to need that much more medical care for this pretty wealthy generation staying put in these coastal communities.
Q: When you say San Clemente and Dana Point are undervalued, what specific metrics are you looking at, and which Southern California markets are you measuring them against?
A: In Fashion Island, small office and medical buildings go for $1,000 to $1,300 a foot. We sold a fairly tired, older building in Laguna Beach that was partly retail, partly office for $650 a foot, and I’m hoping to list another one now in the $800 a foot range. We just don’t see much of that price per foot yet in Dana Point or San Clemente — you’re more likely to see $500 a foot.
The product and the demand aren’t quite there yet, but they’re coming.
Q: What makes you think the same pattern could play out farther south in Dana Point and San Clemente?
A: A lot of clients would like to find something that works, and there’s not a ton that works.
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But the story that tracks with what I think we’ll see — the Irvine Co. built office buildings at Jamboree Road and the 5 Freeway near The Market Place. The theory was that a lot of blue-blood, central-county firms in Orange or near the stadium in Anaheim that had been there for a long time would bring on junior partners, and those junior partners were going to want to raise young families. Where were they moving? They were moving to Ladera Ranch and communities like that, so further south.
I think that’s going to happen again going forward. We’re going to have more people down there, because if Covid taught us anything, it taught us not everybody has to drive to Irvine to go to the office anymore. Why not get something in Dana Point near the house? I think people would rather work near home but don’t necessarily want to work at home.
We haven’t enough of the product yet, so that’s why I’m bullish on it, because I think over time, as more big money comes south, they’re going to need the services of people who need offices.
Q: You say it’s coming, but has anyone actually made that move yet?
A: We sold The Point, a three-story building at the corner of PCH and Copper Lantern. A group bought it when it was pretty tired, and they turned it into what we commonly refer to as a creative office building. They took out the carpet, polished the concrete and then took out the ceiling tiles to expose the ducting, wiring and all the ugly stuff up there, and they cleaned that up. We ended up selling that for a pretty good number at the time.
So, that would be a trend: get an old building and retrofit it.
Q: Is the story the same in San Clemente?
A: I think it is the same, it’s just a little behind.
My partner and I had an office together in Irvine, but when Covid hit … I said, “You know what? I’ll work from home and you can stay in the office.” Because I have kids who were all home, I couldn’t really concentrate. So I found a little office near my house, just two blocks away.
We since got this office in Newport Beach, and we definitely want to be in the office. We want the synergy. We want the camaraderie. It’s critical that we have an office that we all show up to most days of the week, but I still have this little office in San Clemente that I work out of most Fridays. I’m there on the weekends. If I have a meeting down south in the early afternoon, then I just stay down south and go to work there before I head home. I think a lot of people would do that provided they had the opportunity.
Q: If a business owner were to call you tomorrow and say, “Convince me to move my office from Irvine or Newport Beach to Dana Point or San Clemente,” what would you tell them?
A: I would say it’s a great idea, and you’re going to end up being productive because you’ll pick up some time not having to commute. But is there a specific opportunity for them? I would have to look because my point is there just aren’t that many.
Q: If you’re right about these communities becoming much more desirable places to do business, what changes for the people who already live and work there?
A: Of course, there’s always going to be pushback from the “locals,” and beach communities are famous for that. I’ve seen the bumper stickers that say, ‘Don’t Newport My Dana Point.’ But I would say that property values going up is a huge benefit. The other is there are more amenities.
We just had the Miramar Food Hall open up in San Clemente. It was a shame to see that beautiful old building just sit there, dark. If you didn’t have more residents down there to service that new facility, it wouldn’t open, and that’s not good for a community to have a vacancy and graffiti and that kind of thing.
And now, it’s this beautiful amenity that every time I go by it, the place is full. Most restaurants seem to be. Restaurants can open when there’s more lunch traffic, and that’s what office buildings bring.
Steve Economos
Title: Co-founder of Economos DeWolf
Age: 56
Hometown: San Clemente
Education: Bachelor’s of science degree in real estate from Arizona State University
Experience: Launched his commercial real estate career in 1993 at Grubb & Ellis, where he earned recognition as Orange County Rookie of the Year and later Senior Marketing Consultant of the Year. He then opened NAI Capital in 1999, 360 Commercial Partners in 2010 and went on to lead sales at Jones Lang LaSalle in 2012. In 2017, he founded Economos DeWolf with Geoff DeWolf.