The Greater Airport Area is considered the unofficial downtown of Orange County. Spanning more than 100 square miles and feeding off of major transportation arteries such as San Diego (405), Santa Ana (I-5) and Costa Mesa (55) freeways,as well as John Wayne Airport,the Airport Area market is home to nearly half of the county’s office base. Approximately 55% of the Class “A” office space in Orange County is in the Airport Area, attracting a large corporate tenant mix.
The high-quality space and amenities in the Airport Area keep asking rents high. Throughout last year, the asking lease rates in the Greater Airport Area averaged a 12.7% premium over the average rent of the county. In the first quarter, the average asking rent for office space leveled at $2.53 per square foot per month (10% higher than the county average), ending the quarter just 1 cent behind South Orange County, where the high volume of construction activity is edging up the rates.
Demand remained strong in the Greater Airport Area with a vacancy rate less than the 10% threshold at the end of the first quarter. Tenant movements out of the Airport Area generally have been into the new campus-style construction of South Orange County. The first quarter net absorption figure of negative 264,000 square feet was primarily due to the residual movements of Verizon Wireless from its previous locations to a build-to-suit project in the South County, a relocation that began last year. The first quarter net absorption figure also includes a 28% increase in vacant sublease space. Despite the increase in sublease vacancy, the Airport Area has a solid tenant mix, and the market is not expected to suffer from a shakeout in any one industry.
Following the strong demand of 1999 and 2000, construction activity continued throughout the first quarter in the Greater Airport Area. Approximately 114,000 square feet of new low-rise products were added to the base, and another 2 million square feet were under development as the quarter came to a close, with the anticipated ground breaking of Opus Center Irvine Phase II to follow in May.
Analysis provided by CB Richard Ellis’ Global Research and Consulting.
