By JUSTIN HILL
Strong demand for low-rise office space in Orange County sent lease rates higher and vacancy rates lower in the first quarter.
Vacancy fell to 6% from 6.4% in the fourth quarter. More than 550,000 square feet of low-rise space was leased in OC during the first quarter.
Lease rates rose 13 cents to $2.08 per square foot in the quarter, full service gross, from the fourth quarter. It’s the largest quarterly increase since early 2003.
Lease rates were up 20 cents from a year earlier.
The spike in low-rise lease rates largely was due to high-rise office building lease rates pushing past the $3 per square foot mark. Tenants are motivated to look for lower cost alternatives.
Since OC is more of a technology/research and development market, having a high-rise image isn’t necessary for many tenants, unlike in Los Angeles and other areas.
Besides offering lower lease rates than high-rises, low-rise tenants enjoy being able to park in a surface lot, free of charge and walk right into their suites without dealing with the elevators and parking garages that come with high-rises.
Orange County Business Center off Dyer Road and the Costa Mesa (55) Freeway has benefited from the strong interest in low-rise space.
This 447,000-square-foot low-rise office complex went from having about 80,000 square feet available last summer to having just 2,000 square feet vacant at the end of the first quarter. Lease rates at Orange County Business Center are up more than 30 cents from a year ago.
Companies looking to lease space should act quickly,rates are expected to rise more.
Hill is an associate in the Anaheim office of CB Richard Ellis Group Inc.
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