By DEAN CHANDLER
The greater airport area, Orange County’s largest submarket, totals 47.2 million square feet of office space and includes the cities of Costa Mesa, Fountain Valley, Irvine and Newport Beach and portions of Santa Ana and Tustin.
The area saw an office vacancy rate, which includes both vacant direct space and vacant sublease space, of 17.5% at the end of the first quarter. This is about a 1% increase over the fourth quarter level of 16.5%.
The vacancy level has increased by some 11% in the past 12 months.
The greater airport area is struggling more than the overall OC office market, which had a vacancy level of 16.1% at the end of the first quarter.
The first quarter vacancy rate for the greater airport office area represents 8.3 million square feet of vacant space. The vacancy rate for high-rise space (seven stories or higher) in the greater airport area was 20.2%, up from the fourth quarter’s 18.9%.
The average asking lease rate for office space in the submarket stands at $2.60 per square foot, a drop from the $2.68 commanded during the fourth quarter and $2.88 from one year earlier. This decline represents a 9.7% drop in a year.
The overall OC average lease rate declined slightly from $2.52 during the fourth quarter to $2.42. It was at $2.72 per square foot a year earlier.
Among the submarkets, the greater airport area (which includes Newport Center) claims the highest lease rate in OC. These are asking rates, which do not reflect rental increases, concessions and other business points that are related to a lease.
During the first quarter, the greater airport area’s office market saw 494,970 square feet of negative absorption. This compares to negative absorption of 825,119 square feet for all of 2008.
The county’s overall absorption rate was negative 476,805 square feet.
OC’s employment has continued to decline, reaching a 7.8% unemployment rate at the end of the first quarter. It now stands at 8.3%, according to the most recently available figures. Since April 2008, employers have shed a total of 72,600 non-farm jobs. The majority of these layoffs have been in trade, transportation and utilities. It is anticipated that unemployment will continue to contract through the second quarter of 2010.
Chandler is a senior vice president in the Newport Beach office of CB Richard Ellis.
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