The Office Market
The Greater Airport Area makes up nearly half of the Orange County office market, with 595 properties totaling more than 40 million square feet. Net activity reported during the fourth quarter was negative 215,165 square feet due to the move of Verizon Wireless to a newly constructed project in South Orange County. The relocation of this 300,000-square-foot tenant inched the vacancy rate for office space in the Airport Area up to 8.9%, where it started at the beginning of the year. Proving that demand for office space in the Airport Area has not dwindled, however, annual net absorption for the Greater Airport Area reached a high of 1.3 million square feet in 2000, an increase of 68% over the total in 1999. Office space in the Greater Airport Area continues to generate the highest average asking lease rates in the county. The average asking rent for the Airport Area climbed 5 cents in the fourth quarter to close the year at $2.53 per square foot per month, 26 cents higher than the county average.
The Industrial Market
The industrial market landscape in the Airport Area includes 1,574 manufacturing and warehouse buildings and 405 research and development projects totaling more than 69 million square feet. The Airport Area ended 2000 with a strong quarter of leasing and sale activity. More than 1.4 million square feet were transacted during the fourth quarter, pushing the annual gross activity to more than 5 million square feet. Due to the high activity in the market, the overall availability rate for industrial space tightened to just 1.3%, with an actual vacancy rate just less than 1%. Construction activity continued to fill the demand through the end of 2000. In the fourth quarter, one new manufacturing building was completed in Santa Ana. As the year came to a close, development of eight more properties was under way, one in Irvine and the other seven in Santa Ana. Combined, these properties will add 264,814 square feet to the industrial base upon completion.
The Retail Market
Although the Central Coast area has one of the smaller retail bases in Orange County, it contains the greatest density of retail space for the local population. At the end of the fourth quarter, one new neighborhood center totaling 150,000 square feet was added to the Central Coast market, bringing the total gross leaseable space in the area to 11.5 million square feet. The attractiveness of the Central Coast market continued to generate demand through 2000. More than 42,000 square feet were absorbed during the fourth quarter of 2000, pushing the annual absorption to 389,381 square feet, the highest total in the past four years. The Central Coast topped the market with an average asking retail lease rate of $2.07 per square foot per month, 20% higher than the average asking rent for the county as a whole.
