By RICH PINCOTT
With more than 1,500 buildings totaling more than 55 million square feet of space, Orange County’s low-rise office market accounts for roughly 55% of the region’s total office space.
During the third quarter, the low-rise sector actually saw a slight decline in vacancy from 12.9% in the second quarter to 12.5%. This reflects a trend in businesses trying to cut costs.
In the third quarter, low-rise office space in all of OC saw about 198,615 square feet of absorption.
The year-to-date total absorption remains negative at 152,313 square feet.
Currently, there is some 6.9 million square feet of vacant low-rise space. The vacancy represents a 22% increase from one year ago.
The sector’s availability rate, which includes both occupied and vacant available space, currently is 17.3%.
While rents have declined across the board for all types of building, the average asking lease rate for low-rise space decreased by 6 cents last quarter to $2.37 per square foot.
As the largest low-rise submarket in OC in terms of square footage, the greater airport area (approximately 21.8 million square feet) remains essentially unchanged in the third quarter with a negative absorption of 618 square feet.
The greatest absorption was in South County (152,813 square feet), followed by North County with 142,632 square feet of absorption.
Central County had a negative absorption of approximately 52,000 square feet and West County saw negative absorption of approximately 143,000 square feet.
The third quarter statistics do not fully reflect the growing softness in the office market. There continues to be an increase in free rent, tenant improvement packages and moving allowances.
The current outlook for job growth is weak, which likely will lead to higher vacancies and lower rents for the next two to four quarters.
Pincott is a vice president in the Newport Beach office of CB Richard Ellis Group Inc.
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