The Office Market
The Greater Airport Area contains almost half of the 57 million-square-foot office base in Orange County. By year-end 1999, the average asking lease rate for office space in the Airport Area reached yet another high of $2.51 per square foot per month. This was an annual appreciation of 12.6% from the $2.23 rate at the end of 1998. During the fourth quarter, the Greater Airport Area recovered more than 807,000 square feet of positive net absorption when a large block of space, vacated during the third quarter, was re-leased. The absorption activity in the market brought the vacancy rate for office space down to 9.25%, from 10.62% in the third quarter. At the end of the fourth quarter, 796,548 square feet of construction was under way in the Airport Area office market.
The Industrial Market
The Airport Area industrial market consists of 2,101 buildings totaling more than 76 million square feet of industrial space. Approximately 70% of that space is manufacturing and warehouse-type construction. In the fourth quarter, the availability rate for total industrial product (M & W; and R & D; combined) dropped to 6.15% in the Airport Area market, down 21% from the third quarter. The M & W; availability dropped below 5% in the fourth quarter, and the R & D; availability dropped below 10%.
The average asking lease rate for M & W; dropped 2 cents in the fourth quarter to 65 cents per square foot per month, however the fourth-quarter rate shows an increase of nearly 5% year-to-year. Although the average asking lease rate for R & D; space remained flat during the first half of 1999, it rose to 93 cents per square foot by the end of 1999, up from the 83-cent rate reported from the fourth quarter of 1998 through the second quarter of 1999.
Construction under way in the Airport Area industrial market includes nearly 140,000 square feet of M & W; space, and 570,000 square feet of R & D; space, which is 57% of the total current R & D; construction in Orange County.
The Retail Market
The Central Coast market area accounts for approximately 16% of the county’s retail shop space, and is the densest retail market area with 35.1 square feet of retail space per capita. The Central Coast market contains some of the most expensive retail space, with some asking rates reaching well over the $2 mark for some centers. During the fourth quarter, the Central Coast carried the highest average asking lease rate in Orange County at $1.97. The vacancy rate for retail shop space in the Central Coast dropped in the first half of the year, and rose in the second half, ending at 8.18%, up from 7.16% at the end of 1998. There are two centers, totaling 465,000 square feet of retail space, under construction in the Central Coast market. This construction activity, which includes one neighborhood and one community center, is approximately 23% of the total construction under way in the Orange County retail market.
