The North Orange County office market remained strong during the third quarter and is moving steadily forward as 2014 comes to an end.
The vacancy rate went from 11.9% a year ago to 14.6%, an increase of approximately 23%.
Historically, rents have popped as vacancy rates hit the 11% mark, and it seems as if history is about to repeat itself.
Absorption is still negative for the year—the result of three large move-outs totaling approximately 440,000 square feet. The county seems to chip away at those numbers each quarter, and it doesn’t seem to raise any major concerns about the overall market’s health.
Alignment Healthcare signed a new 45,000-square-foot lease at Orange Executive Tower, and St. Joseph Heritage Healthcare recently signed a 190,000-square-foot lease in Anaheim, helping make it more likely that the North Orange County market will finish out the year with some substantial positive absorption.
The North OC market currently has 125 office buildings totaling approximately 8.5 million square feet. There are no speculative office buildings under construction in the market, as office development in Orange County has been slow to pick up. It’s just a matter of time before the first new building in more than 10 years will be constructed.
Hill is a first vice president at CBRE.
