Orange County’s high-rise market, consisting of 114 buildings, accounts for 29% of the Orange County office market. The third quarter was the first this year in which the vacancy rate rose in the high-rise sector, going from the second quarter’s 9.3%, to 9.5%. This increase was due to the completion of a high-rise building that was not fully pre-leased, which added 50,000 vacant square feet to the market. Even with the rise in vacancy rate, net absorption remained positive at 159,859 square feet for the quarter, bringing the total absorption for the year to 615,870 square feet. By this time last year, 495,298 square feet had been absorbed.
The completion of Lakeshore Tower III in Irvine marks the first new high-rise addition to the OC market since the third quarter of 1999. This added 230,000 square feet into the base of 23 million square feet of high-rise product, with 180,000 square feet pre-leased. The quarter also saw the groundbreaking for 1901 Main St, exactly one year after the completion of its twin, 1900 Main St. Santa Ana’s Twin Towers, totaling 414,000 square feet, are due in the first half of 2001, and an additional 586,427 square feet are under development in several other projects, all in the Airport Area.
With the new buildings available in the Airport Area, the average asking lease rate in that market is up to $2.79 per square foot per month, 19 cents higher than in the second quarter. Certain prime high-rise spaces in submarkets such as Newport Center are asking more than $4 per square foot per month. The average asking rent for high-rise product in South Orange County, where vacancy dropped below 4% in the third quarter, reached even higher to $3.17, up 45 cents from the previous quarter. The overall average asking lease rate for OC’s high-rise sector has risen 8% to $2.37 from the second quarter’s $2.19.
