The Central and North Orange County office markets have traditionally trailed the Greater Airport Area and South Orange County office markets in terms of vacancy, average asking lease rates, and absorption of space, and 2014 was no different.
The good news is that Central and North Orange County office vacancies are trending lower, with the larger blocks of space becoming limited and no new construction on the horizon.
Several class A office projects were able to attract large tenants looking to move up in quality, and they successfully secured long-term leases at attractive rents.
St. Joseph Health System leased 190,000 square feet at the former AT&T building in downtown Anaheim, and St. Jude Healthcare signed a lease for 42,000 square feet at the ECCU project at 955 W. Imperial Highway in Brea.
The Central OC office market is comprised of approximately 16.6 million square feet in 284 buildings larger than 30,000 square feet.
The vacancy rate at the end of last year was 14%, down from 14.4% at the end of 2013. Absorption was positive at 219,277 square feet, compared to 32,517 square feet at the end of 2013. And the average asking lease rate was $1.78 per square foot, a slight increase from $1.76 per square foot at the end of 2013.
The North OC office market includes nearly 8.6 million square feet in 125 buildings larger than 30,000 square feet. The vacancy rate for the fourth quarter was 13.8% compared to 13% at the end of 2013, but the absorption was positive 66,817 square feet compared to negative 96,244 square feet at the end of 2013. The average asking lease rate increased to $1.94 per square foot from $1.90 per square foot at the end of 2013.
The Central and North OC office markets are showing steady growth this year.
The pendulum could eventually swing toward a landlord-driven market as class A rents tighten well over the $2-per-square-
foot threshold and quality space becomes scarce.
Abel is a first vice president at CBRE.
