Equity Office Properties Trust, the county’s second largest office landlord, has upped asking rents at its buildings here in the past few weeks.
Chicago-based Equity Office raised monthly rents for new tenants by 25 cents to 40 cents on all buildings in Orange County as of Dec. 8, according to area brokers.
The landlord owns and manages 29 office buildings totaling about 5.7 million square feet in OC, primarily in Irvine and Central County.
The moves come less than a month after Equity Office,the largest office property owner in the country and second locally to The Irvine Company,said it was being acquired by private equity investor Blackstone Group LP, in a record $36 billion deal. The deal is set to close in the first quarter.
“I think the increases are a reflection of Blackstone’s demand to create value for their investment,” said Greg May, senior vice president for the Newport Beach-based office of Grubb & Ellis Co. “They have a different focus than Equity Office, which has had a real drive to get high occupancy rates in their properties.”
Equity’s moves likely are the first salvo in what is expected to be an intriguing 2007 for the office market, which is set to see several towers completed amid record-low vacancy rates.
Whether other area landlords,who long have argued the county’s rents lag other Southern California areas,follow suit with their own increases remains to be seen.
“Rate increases and decreases are always a reflection of market demand,” May said. “But just because one landlord does it, doesn’t mean that others will.”
Equity’s higher rents stand to make the company’s buildings among the most expensive in the county, trailing only the towers around Newport Beach’s Fashion Island.
For more on this story, see the Dec. 18 edition of the Business Journal.
