NORTH & CENTRAL ORANGE COUNTY
The North/Central Market Area typically offers lower asking prices than the southern half of the county. The price differential in lease rates between the northern and southern parts of the county has helped fuel demand in North and Central Orange County. Construction activity is taking place in all three major commercial sectors with over 2.3 million square feet under way.
The Office Market
Together, the North and Central parts of Orange County account for nearly 32% of the county’s office base. Except for the first quarter, the vacancy rate has remained in the 12.3% to 12.6% range for the past five quarters. Within the last quarter, the North and Central Orange County vacancy rate increased a modest one-third of a percentage point (0.34%) to 12.65% from the second quarter rate of 12.31%. Despite the increase, it is less than a point higher than the third quarter overall Orange County office vacancy rate of 11.76%. The average asking lease rate for office space in North/Central Orange County has improved 14 cents (9%) over the past year, rising to $1.66 in the third quarter. Nearly 32,000 square feet of positive net absorption was experienced, reversing the negative net absorption of the second quarter.
The Industrial Market
The North/Central area accounts for 43% of the county’s industrial base, and is a tight market with the lowest availability in the county. Demand remains high in this market area. Approximately 1.6 million square feet of M & W; space was under construction in the North/Central Orange County area, and 82,000 square feet of research and development had broken ground. The average asking lease rate on manufacturing and warehouse space, which represents virtually the entire industrial base (90%) in the North/Central area, increased 6% over the past year to 53 cents, from 50 cents in the third quarter of 1998. At the end of the third quarter of 1999, the availability of all industrial space in the North/Central Orange County market increased to 6.09%, from 6.69% in the second quarter.
The Retail Market
The retail market in the North/Central part of Orange County is 51% of the county’s retail base. During the past 12 months, the vacancy rate has declined approximately 7% to 8.33%. In third quarter of 1998, the vacancy rate for retail shop space in North/Central Orange County was 8.95%. By the end of the third quarter, approximately 575,000 square feet of retail space was under construction. The new construction activity in the North/Central County market area appears to be influencing lease rates. The average asking lease rate for shop space stabilized and remained unchanged for the quarter at $1.41. Year-to-date, approximately 80,000 square feet of net absorption has been experienced.
South Orange County contains approximately 17% of the net rentable office area in Orange County. For the third quarter, the South Orange County office market experienced approximately 160,000 square feet of positive net absorption, which pushed year-to-date total net absorption to more than 609,000 square feet. Reflecting the positive net absorption, vacancy rates declined to 11.47% from 13.12% in the second quarter, a 13% drop. Lease rates for office space stabilized. The average asking lease rate for traditional office space remained unchanged from the second quarter, at $2.09 per square foot.
CHART NOTES:
Office market includes single- and multi-tenant buildings of 30,000 square feet or larger, excluding medical, government and R & D; buildings, in Anaheim, Brea, Buena Park, Fullerton, Garden Grove, La Habra, La Palma, Orange, Placentia, Yorba Linda and parts of Santa Ana and Tustin. Rental rates are full-service gross. Industrial market includes single-tenant M & W; and R & D; buildings 10,000 square feet or larger in Anaheim, Brea, Buena Park, Fullerton, La Habra, Orange, Placentia and Yorba Linda. Gross available includes space under construction. Net absorption figures are actually “net activity,” i.e. the change in the total amount of available square feet for one period to the next. Rental rates are triple net. Retail market include retail centers of 50,000 square feet or larger, but excludes strip centers and free-standing retail buildings, in Brea, Costa Mesa, Fullerton, Irvine, La Habra, Newport Beach, Placentia, Yorba Linda and portions of Anaheim and Buena Park. Vacancy and rents exclude regional malls and are shown for shop space only, excluding anchor tenants. Gross available excludes space under construction. Retail rents are triple net. For all property types, availability is for direct lease space only and does not include sublease space. Absorbed square feet does not include preleased space. Lease rates are per square foot per month, excluding free rent, tenant improvements and other concessions, if any, and weighted by vacant square feet. Historical figures have been adjusted to reflect changes to the base; consequently historical figures reported here may not agree with previously reported figures.
