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Monday, Feb 17, 2025
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Central, North OC Office Markets Strengthen

The Central and North Orange County office submarkets have traditionally trailed the Greater Airport Area and South Orange County office submarkets in terms of vacancy, average asking lease rates, and space absorption.

This year has been no different.

The good news is that Central and North Orange County office vacancies are trending lower, with the larger blocks of space becoming limited and no new construction on the horizon.

The Central Orange County office market is comprised of approximately 16.6 million square feet in 284 buildings that are over 30,000 square feet. Its vacancy rate at the end of the third quarter was 12.2%, down 20.3% from the 15.3% recorded one year earlier.

Absorption was negative 3,351 square feet, though the 2015 annual net absorption remained positive for Central Orange County at 299,498 square feet. The average asking lease rate was $1.89 per square foot, an increase of 6.2% year-over-year.

The North Orange County Office market includes 8.6 million square feet in 125 buildings of over 30,000 square feet. The overall vacancy rate dropped significantly from a year earlier—by 26.7%, ending the quarter at 10.7%.

Net absorption was also negative in North Orange County, ending the quarter at negative 9,229 square feet. Annual net absorption remained positive at 272,861 square feet. The average asking lease rate increased 8 cents from the second quarter to $2.02 per square foot, an increase of 4.1% year-over-year.

The Central and North Orange County office markets are showing steady growth this year. As class A rents continue their upward trajectory, well over the $2-per-square-foot threshold, and quality space becomes scarce, eventually the pendulum will swing toward a landlord-driven market.

Analysis provided by CBRE Research

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