The high-rise office market in Orange County ended the second quarter with steady demand, resulting in 69,314 square feet of positive net absorption.
Nearly all of the absorption—86,581 square feet—took place within Central Orange County, where 35 of the high-rise buildings are located.
The Greater Airport Area is home to the majority of the high-rise buildings—76—and ended the quarter at positive 8,722 square feet of net absorption.
The year-to-date net absorption totals 545,403 square feet for the high-rise market, an increase of nearly 250,000 square feet year-over-year.
Vacancies
The vacancy rate within the high-rise market is steadily falling and finished the quarter at 12%, representing a dramatic decline of 18.2% from a year earlier.
The Central OC submarket had the largest year-over-year drop in vacancy during the quarter, decreasing nearly 40% from the second quarter of 2014.
Asking Rates
Asking rates increased 5.6% from the previous quarter and over 10% from 12 months earlier.
The current average asking rate for the Orange County high-rise market is $2.44 per square foot. The previous low point of $2.08 per square foot was seen during the third quarter of 2012, and the last peak was $3.17 per square foot in the fourth quarter of 2007.
There is a 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 had the highest asking rates within the region, ending the quarter at $2.86 and $2.63 per square foot, respectively.
Fundamentals
Overall market fundamentals have significantly improved and are showing signs of continuous acceleration.
We expect lease rates to continue to grow and vacancy rates to continue to trend downward. Tenant demand remains strong, and the Orange County office market is poised to have a strong year.
Data and analysis provided by CBRE Research
