Low-rise office buildings are a significant part of the office market in Orange County, accounting for over half—54,841,082 square feet—of the total office space.
The low-rise office market has started to gain traction, as such properties are popular among tenants who are looking for space that can easily be converted into a creative or collaborative working office.
The low-rise market at the end of the first quarter posted positive net absorption of 97,202 square feet. That’s up from the negative 467,812 square feet of net absorption recorded in the fourth quarter.
The vacancy rate consequently decreased 1.1% from the fourth quarter, ending at 9%. The year-over-year vacancy rate has dropped 3.2%.
Average asking lease rates continued their upward trajectory, ending the first quarter at $2.25 per square foot. That represents an increase of 11.4% over last year’s rate of $2.02 per square foot and a 1.4% increase over the fourth quarter.
The past 12 months have shown aggressive lease rate appreciation, and rates are projected to continue to increase throughout the year, though at a slower pace than that of last year.
The overall low-rise office market fundamentals are expected to remain healthy as tech-related companies drive the creative-office trend.
Data and analysis provided by CBRE Research
