The Office Market
In the fourth quarter, 17 properties were added to the South Orange County office market, which now totals 328 properties and 16 million square feet. The new construction includes Discovery Business Center, Mission Ridge, Pacific Vista and Palm Terrace projects. The vacancy rate for office space in South Orange County moved upward during the fourth quarter to 11.2%, from 8.2% the previous quarter, due to the addition of the newly developed, non-leased space. However, the total absorption for 2000 reached an impressive 2.3 million square feet, of which 588,776 was absorbed during the final quarter, proving the continued strength of the market. The greatest quarterly rent spike in Orange County was seen in the South County market, where most of the new, non-leased construction came on the market with asking rates ranging from $2.00 to $2.95 per square foot per month, bringing the average up 13 cents per square foot to $2.45.
The Industrial Market
The South Orange County industrial market includes 854 buildings totaling 29 million square feet. The research and development market contributes 11 million square feet to the base, and the manufacturing and warehouse market contributes 18 million square feet. The combined vacancy rate for industrial space dropped to a low of 2.4% in the fourth quarter, driven more than 1 million square feet of sale and leasing activity. Net absorption for industrial space reached a combined total of 269,471 square feet in the fourth quarter, pushing the total net absorption for the year to more than 2.2 million square feet. South Orange County continued to dominate the rent scale locally, with asking averages of 69 cents per square foot per month for M & W; space and 85 cents for R & D; space. More than 60% of all construction completed in 2000 was delivered in the South Orange County market. Heading into 2001, industrial construction activity under way totaled 178,665 square feet, 82% of which was manufacturing product.
The Retail Market
South Orange County continues to be the second-largest retail market in Orange County, with 103 shopping centers totaling 15.5 million square feet of gross leasable area. Two new centers, one specialty and one community center, broke ground in the fourth quarter and added 230,000 square feet to the retail space under development in the South County market, which totaled 800,000 square feet as the year came to a close. The vacancy rate for retail space ticked up slightly to 8.1% due to 10,581 square feet of negative net absorption in the fourth quarter. However, net absorption remained positive in 2000 at more than 50,000 square feet. Average asking lease rates jumped the highest in South Orange County as the asking average rose from $1.88 per square foot per month in the third quarter to a fourth quarter average of $2.01.
