The Office Market
The Greater Airport Area, which consists of 593 buildings, remains the largest office market in Orange County. Traditionally also the tightest market, the Airport Area ended the third quarter with a 7.9% vacancy rate, as more than 1 million square feet were absorbed, accounting for approximately 52% of the total positive office absorption experienced throughout the county. Average asking rents shot up 18 cents to $2.48 per square foot per month, the highest in the county. Since the average is weighted by the amount of available square footage in the market, large fluctuations occur when new, expensive construction is delivered and absorbed quickly. Nearly 70% of the total construction completed in Orange County during the third quarter was concentrated in the Greater Airport Area. Of the 1 million square feet added to the base, 79% was leased by quarter-end.
The Industrial Market
The Airport Area industrial market has grown to 1,980 buildings, 75% of which are manufacturing and warehouse and 25% research and development. Two M & W; buildings were completed during the third quarter, adding 74,986 square feet to the Airport Area market. Although availability rose to 6.2% as the new construction came in, actual vacancy of industrial space tightened slightly due to increased sale and leasing activity. The vacancy rate dropped to 1.7% in the third quarter, down from 1.8% in the second quarter. The average asking lease rates for both M & W; and R & D; in the Airport Area market remained the same in the third quarter as in the second, at 65 cents per square foot per month and 85 cents, respectively.
The Retail Market
Central Coast, which consists of 52 centers, is the smallest and most dense retail market in Orange County. The vacancy rate for the Central Coast area remained the lowest at 7.4%, despite a small setback of negative activity. Although the Central Coast area experienced negative absorption of 17,845 square feet during the third quarter, total absorption for the year to date reached more than 329,269 square feet. The Central Coast retail market ended the third quarter with an average asking lease rate of $2.07 per square foot per month, 40 cents more than the county average. Construction activity in the Central Coast market in the third quarter included the continued development on one neighborhood center and the start of one new specialty center.
