The high-rise market in Orange County ended the third quarter with steady demand, although it experienced negative net absorption of 132,380 square feet, the majority of which took place in the Greater Airport Area, where 76 high-rises are located.
A bright spot was 23,746 square feet of net absorption was generated in the Central Orange County submarket. Net absorption in the high-rise market totaled 413,023 square feet year to date, a 19% increase in absorption year-over-year.
The vacancy rate in the high-rise market has been steadily falling, with the exception of the third quarter, when it increased from 12% to 12.5%. That represented a 13.9% drop from the 14.5% recorded a year earlier.
Asking rates increased 2% over the second quarter and 10.7% from a year earlier. The Central Orange County submarket experienced the largest year-over-year drop in vacancy, decreasing nearly 37% from the third quarter of 2014.
The average asking lease rate in the high-rise market ended the quarter at $2.49 per square foot. The previous low point of $2.08 per square foot came in the third quarter of 2012, and the last peak was $3.17 per square foot in the fourth quarter of 2007.
There is still a ways to go in order to reach peak asking rates, though the Orange County office market has shown tremendous growth in rental rates over the past 12 months.
The South Orange County and Greater Airport Area submarkets held the highest asking rates, ending the third quarter at $3.02 and $2.67 per square foot, respectively.
Overall market fundamentals have significantly improved and are showing signs of continuous acceleration.
CBRE expects lease rates to continue to grow and vacancy rates to keep trending downward. Tenant demand remains strong, and the Orange County office market is poised to finish out the year strong.
Data and analysis provided by CBRE Research
