Real Estate Watch: Low-Rise
Low-Rise Bounces Off the Technology Downturn
The low-rise market led the recovery in Orange County’s office market through the third quarter.
Net absorption of 391,297 square feet of low-rise space,defined as buildings three stories or less,was positive for the second consecutive quarter. The vacancy rate fell to 14.4%.
Although the amount of space under construction in the low-rise market increased slightly in the quarter, overall activity is less than half of what it was at the same time last year.
Three low-rise and campus projects were being built at the close of the third quarter. They totaled 863,893 square feet.
Activity includes: renovation and construction of the Newport Technology Center, set for completion in the fourth quarter; and the Arena Corporate Center in Anaheim, a three-building project totaling 383,250 square feet, which is 49% pre-leased.
One new project, the 62,258-square-foot second phase of the Arbours Office Campus in Rancho Santa Margarita, began construction in September.
No low-rise construction was completed this quarter.
The South County low-rise market is seeing renewed activity in the remaining first-generation space that was built to accommodate the highly anticipated tech expansion, which was cut short in 2001.
In the third quarter, more than 265,000 square feet were absorbed in South County. That lowered the vacancy rate in the area to 15.9%, down from 17.8% the previous quarter. South County accounts for half of the total absorption this year.
The low-rise market in the greater John Wayne Airport area also performed well in the third quarter.
The region had 166,118 square feet of positive absorption and a drop in vacancy to 15.1%, down from 15.9%.
Asking rents dropped an average of five cents per square foot, ending the third quarter at $1.89.
South County continues to boast the highest asking lease rate,averaging $2 per square foot,followed closely by the John Wayne Airport area at $1.97.
Analysis provided by CB Richard Ellis’ Global Research and Consulting.
