With more than 1,500 buildings totaling more than 55 million square feet, Orange County’s low-rise office market accounts for roughly 55% of the county’s total office space. The low-rise sector has seen a slow 2008, although it picked up in the second quarter.
In the quarter, low-rise space saw 400,179 square feet of absorption. But the year-to-date total remains negative with 233,509 square feet.
The positive absorption that occurred led to a decreased vacancy rate, while the availability rate increased slightly. As it stands, there is about 7.1 million square feet of vacant low-rise space, yielding an overall vacancy rate of 12.8%.
The rate is up 39% from a year earlier, but below the 13.4% vacancy rate seen in the first quarter.
The sector’s availability rate, which includes occupied and vacant available space, is 17.2%. While rents have declined across the board for all types of space, the average asking lease rate for low-rise space decreased by 3 cents this quarter from the first to $2.43 per square foot a month.
As the largest low-rise market in OC in terms of square footage, the greater airport area submarket saw increased activity in the second quarter.
The vacancy level declined to 12.2% from the first quarter’s 13.5% and produced 298,467 square feet of absorption in the second quarter.
Average asking lease rates decreased and now stand at $2.44 per square foot.
South County, which is the second-largest low-rise market, also saw decreased vacancy and absorption in the second quarter with a rate of 14.6% and 152,240 square feet.
Almost half of the space added to the OC office market since 2007 was low-rise offices. More than 201,000 square feet of construction has been completed this year, with the majority being delivered in the second quarter. Currently, there are two remaining low-rise projects in the pipeline totaling 80,000 square feet.
Data and analysis provided by CB Richard Ellis Research.
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