The Office Market
South Orange County contains approximately 17% of the net rentable area in the OC office market. For the fourth quarter, the South Orange County market experienced more than 250,000 square feet of positive net absorption, which pushed total absorption for the year to 863,997 square feet. Reflecting the positive net absorption, vacancy rates again declined, to 10.45% from 11.47% in the third quarter. Lease rates for office space stabilized at $2.09 per square foot in the second and third quarters, but began to rise again in the fourth quarter to an average of $2.17 per square foot.
The Industrial Market
South Orange County contributes almost 12% of the total industrial base in OC. During 1999, more than 1.7 million square feet of industrial space was added to the South Orange County base. By the fourth quarter, another 760,000 square feet of industrial construction were under way, to be completed this year. A little more than half of the new construction is manufacturing and warehouse-type development. The availability rate for industrial space in South Orange County declined to 12.58% in the fourth quarter from 13.10% in the third quarter. The availability rate for research and development space declined to 16.12% in the fourth quarter, while the M & W; availability rate rose slightly to just more than 10%.
Although unchanged from the third quarter, the 79-cent average asking lease rate for industrial space remains the highest combined (M & W; and R & D;) average in the county. The fourth-quarter average asking lease rate for M & W; space in South Orange County leveled at 70 cents per square foot, 19% higher than the county average. The average asking lease rate for R & D; space in South Orange County decreased 1 cent from the third quarter, to 88 cents per square foot, matching the county average.
The Retail Market
South Orange County has about 22% of the county’s total retail base. In the fourth quarter, one specialty center totaling 250,000 square feet of gross leasable area was continuing construction, and a new community center broke ground, which will add another 450,000 square feet of gross leasable area. The retail vacancy rate in South Orange County ended 1999 at 6.86%, up from 6.42% in the third quarter. Although the vacancy rate for retail shop space rose almost 7% in the fourth quarter, South Orange County continues to maintain the lowest vacancy rate in the county. Average asking lease rates for retail shop space dropped in the first quarter of 1999 and rose through the second and third to return to the year-end 1998 figure of $1.69 per square foot. In the fourth quarter, the average dipped again, to $1.68. For the quarter, asking rates ranged from a low of $1.52 to a high of $1.84.
