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Tuesday, Mar 19, 2024
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Verizon’s move pushes up OC’s high-rise vacancy rate

The Orange County office market includes 114 high-rise structures with seven or more floors, totaling 23.7 million square feet of net rentable area. Among the activity in the high-rise market during the fourth quarter was the move of Verizon Wireless out of 237,000 square feet of space at Park Plaza in Irvine to a complex of newly constructed low-rise buildings in the Irvine Spectrum. The large block of space hitting the market caused the vacancy rate to jump to more than 10% on a negative net absorption of 119,445 square feet. All markets, other than the Airport Area, experienced positive activity and dropping vacancy rates during the fourth quarter. Although the vacancy rate ended the year at 10.3% in 2000, that was a drop from 11.2% from the fourth quarter of 1999.

Proving the strength of the high-rise market, average asking lease rates for high-rise space rose 24 cents in the fourth quarter, to $2.61. Certain prime high-rise spaces in submarkets such as Newport Center surrounding Fashion Island were asking around $5 per square foot per month as 2000 came to a close.

The high-rise market in South Orange County remained the tightest through the end of the year as the vacancy rate dropped to a low of just 1.1%, down from 3.1% in the third quarter. Due to the demand and scarcity of space in the South County area, the average asking lease rate for high-rise space closed the year at $3.17 per square foot, far above the high-rise average for the county.

High-rise construction continues to be concentrated in the Greater Airport Area. The sole high-rise completion of 2000 was the addition of Lakeshore Tower III, in Irvine, the first new high-rise building in Orange County since the third quarter of 1999. Heading into 2001, construction activity in the high-rise market continued with 582,887 square feet of development under way, including Santa Ana’s Twin Towers, in the South Coast Metro submarket, and Koll Center Irvine II in the Irvine Business Complex. More than 4 million square feet of high-rise construction remain in the planning pipeline, most slated for Central Orange County and the Greater Airport Area.

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