More than half (53%) of the Orange County office base is made up of low-rise buildings,that is, those that are one to three stories in height. The average asking rents for low-rise space in the Orange County office market have been climbing streadily. The first quarter’s $1.89 average rate for low-rise space is 4% higher than the average rate of the preceding fourth quarter, and 13% higher than the $1.67 rate in the first quarter of 1999. Although the rates for low-rise space are increasing, the average rents remain well below the average asking rents of $2.04 for mid-rise space, and $2.38 for high-rise office product.
Low-rise office space continues to attract tenants looking for lower-cost alternatives in Orange County. The low-rise market experienced 547,889 square feet of positive net absorption to start the year. Accordingly, vacancy rates for low-rise space dropped in the first quarter to 9.12%, compared with 9.22% in the fourth quarter. Although the vacancy rate decreased during the quarter, it remained higher than the 8.47% rate posted in the first quarter of 1999. The year-to-year increase is due to the large volume of new developments that came on line in 1999.
That pace of low-rise development in Orange County is continuing into 2000. In the first quarter, 556,499 square feet of office space were delivered, all low-rise projects. One building was completed in the Greater Airport Area, adding 94,053 square feet to the low-rise market. Another 462,446 square feet were added to the market in South Orange County in Aliso Viejo, Foothill Ranch, San Clemente and the Irvine Spectrum. There are another 1.6 million square feet of low-rise office space under construction, 52% of the total office development under way in the Orange County office market. Some 270,000 square feet of the space under construction is in the Greater Airport area, and the remaining 1,386,776 square feet are in South Orange County.
