South Orange County office space continues to show positive signs after a third quarter of 191,147 square feet of net absorption.
The South OC office market, up to the end of the third quarter, had more than 745,000 square feet of positive net absorption, chipping away at the 2.6 million square feet of vacancy.
Desirable Market
South OC remains a desirable market with newer space, lower parking fees and more choices for office tenants.
OC’s employment rate is down slightly to 7.7% overall, down from 9% in August 2011.
Growth in healthcare, software and technology is driving demand in the South OC leasing market.
Historically low interest rates continue to fuel demand from office users to purchase commercial property, creating a competitive environment for buyers in South OC. The current limited supply has stabilized the sales market and is increasing sale prices.
Vacancy levels for office space continued to fall, hitting 11.3% by the end of the third quarter. That was down from 12.2% in the second quarter and from 15.3% from a year earlier.
10 Quarters
Good tenant demand has meant 10 consecutive quarters of positive absorption, but average rents continued to fall in the third quarter. The average asking full-service gross lease rate moved down 2 cents in the third quarter to $1.93 per square foot in South OC.
Lease rates have fallen consistently since the peak in late 2007. But the decline rate has slowed significantly, and rents should stabilize further next year.
Morrow is a senior associate in the Newport Beach office of CBRE Group Inc.
The Real Estate Watch Chart
Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
