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Thursday, Mar 28, 2024
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Central, North OC Office Market Space Tightens in Q1

The Central and North Orange County office submarkets have traditionally followed trends in the Greater Airport Area and South Orange County office submarkets in terms of vacancy, average asking lease rates, and absorption of space, and this year is proving to be no different.

The good news is that the submarket’s office vacancies are trending lower, with the larger blocks of space becoming limited and no new construction on the horizon.

The Central Orange County office market is comprised of approximately 16.6 million square feet in 284 buildings of over 30,000 square feet.

Its vacancy rate at the end of the first quarter was 12.3%, down from 13% one year earlier. Absorption was positive, ending the quarter with 15,769 square feet. The average asking lease rate was $2.04 per square foot, an increase of 14% year-over-year.

The North Orange County Office market includes 8.6 million square feet in 125 buildings over 30,000 square feet. The overall vacancy rate dropped significantly from the first quarter of 2015, ending the first quarter at 8.8%.

Net absorption was positive in North Orange County, ending the quarter at 73,648 square feet. The average asking lease rate increased 8 cents from the fourth quarter to $2.18 per square foot, representing an increase of 12.4% year-over-year.

The Central and North Orange County office markets showed steady and positive growth in the beginning of the year. Eventually the pendulum will swing toward a landlord-driven market as class A rents continue their upward trajectory—well over the $2 per square foot threshold—and quality space becomes scarce.

Analysis provided by CBRE Research

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