Orange County’s office market took another tumble in the second quarter with rents declining as businesses continued to shed space at an alarming rate.
The area’s office market, which totals about 107 million square feet of space, saw rents fall 3% in the second quarter compared to the first, according to a survey of local brokerage data.
Monthly rents,which now average about $2.30 per square foot to $2.60 per square foot for higher-end buildings,are off nearly 15% from a year ago.
Rents are down close to 18% from the 2008 peak of OC’s office market.
At the same time, businesses here shed nearly 1 million square feet more space than they leased in the quarter, continuing a trend of negative absorption that’s been ongoing since 2007.
Factoring in empty space that’s available for sublease, OC’s office market now counts an availability rate close to 25%, according to data from the local offices of Santa Ana-based Grubb & Ellis Co., leaving little hope for an uptick in rents.
But that’s good news for tenants looking for an upgrade in space.
“It’s a historic time” to be a tenant in OC, said Royce Sharf, executive vice president for the Irvine office of brokerage Studley Inc. “We’re seeing transaction terms we never thought were possible.”
The brokerage is expecting negative trends to continue through the end of 2009, as well as next year.
For more on this story see the July 13 edition of the Business Journal
