Shea Unveils AXIS Business Park; Apartment Rents at Plateau
Delta Associates, the research arm of Transwestern Commercial Services has released its midyear office report, putting into perspective what many of us already knew. But there were surprises, too.
Here’s one: it’s no secret the economy is slowing, but did you know Orange County has gained manufacturing jobs in the past 12 months while Los Angeles County lost 9,700 in the same period?
Overall, OC gained 43,000 jobs (3.1% job growth) in the past 12 months from May 2000 to May 2001. Another job note: a survey of companies revealed that 22% of those in OC plan to add staff during the third quarter, while 17% plan to cut back. In Los Angeles County, those numbers are 19% planning to add jobs and 15% looking to cut back. Nationally, the numbers were 27% and 9%, respectively.
Delta isn’t expecting a prolonged downturn. Its researchers expect slow growth to continue in the near term with growth reaching late-1990s levels by the end of 2002.
Though the office market struggled early this year, “old economy” companies are cause for optimism, the report said. Financial service firms in particular are helping to fill the void of ailing technology companies. The OC office market experienced 564,000 square feet of net absorption in the second quarter, a significant recovery from the 98,000-square-foot negative net absorption during the first quarter. Financial firms such as MBNA Corp., Option One Mortgage Corp., Sunwest Bank and PIMCO Advisors were among the space fillers.
Broken down further, Class A net absorption reached 342,000 square feet in the second quarter, compared to 16,000 square feet in the first quarter. In all, 16 of 31 OC submarkets experienced positive net absorption. But the tech-heavy Irvine Spectrum didn’t fare as well, with a negative net absorption of 556,000 square feet, due in part to Western Digital Corp.’s move to Lake Forest.
Among the hot submarkets were Mission Viejo (352,000 net absorption), South Coast Metro (215,000), San Clemente/San Juan Capistrano (177,000) and Newport Beach/Newport Center (142,000).
The direct vacancy rate rose to 10.3% in the second quarter, up from 9.4% in the first and 8.8% at year-end.
The John Wayne Airport area continued to be strong, dropping just 80 basis points to 8.8%. Four of the 11 recorded office transactions in OC occurred in the airport area.
Construction was another bright spot. OC counts 3.2 million square feet of office space under construction, a significant increase from the 2.7 million square feet under construction at the end of the first quarter.
That number is down, though, from 5 million square feet under construction at mid-year 2000.
COMMERCIAL
Aliso Viejo-based Shea Properties unveiled its plans for a huge Lake Forest business park.
When completed, the so-called AXIS business park stands to encompass nearly 5 million square foot office and industrial business community. Site grading has begun on the 84-acre phase one with a completion date set for early 2002.
Irvine-based LPA designed the project’s master plan, Irvine-based Hunsaker and Associates handled civil engineering and CB Richard Ellis’ Newport Beach office will market AXIS.
The site is part of the 5,000-acre Baker Ranch and adjoins a 1,000-acre nature preserve.
CT’s El Segundo Rehab
Newport-beach-based CT Realty Corp. has launched an $8 million redevelopment project in El Segundo and has set a completion date for later this year. CT Realty purchased the property earlier this year for $4 million from Eaton Corp. and, after razing several smaller buildings, plans to convert the existing 44,000-square-foot structure into a 50,000-square-foot Class A office building. San Clemente-based Carter Group Architects Inc. designed the redevelopment. Costa Mesa-based Hedley Construction and Management Inc. is the general contractor and Craig Meyer and Steven Solomon of the Santa Monica office of Colliers Seeley are marketing the property.
RESIDENTIAL
Marcus & Millichap Real Estate Investment Brokerage Co. has released its apartment research report for OC.
Since the first quarter of 1998, the average apartment rent increased 28%, from $917 to $1,181.
With only 2,200 units starting construction this year, you would expect rents to continue to climb at that rate. But, due to outside forces, rents should remain relatively in check, according to the report.
“The main factors holding back the Orange County apartment market are obvious,economic uncertainty and the California energy crisis,” said John Przybyla, regional manger for Marcus & Millichap. “Economic diversity will keep the county from slipping in a recession, so apartment owners have no need to worry. However, the energy crisis will prevent them from seeing rent growth of the last couple of years.”
