The research and development market in Orange County had negative absorption of 67,428 square feet in the first quarter as the market remained tight and competitive.
Market conditions have led to more off-market transactions and users looking to other geographical areas for space.
West Orange County represented almost all of the negative net absorption in the quarter, with 95,900 square feet. The Greater Airport Area was the only submarket to generate positive net absorption, ending the quarter with 85,797 square feet.
Gross Activity
The Orange County research and development market generated 169,978 square feet of gross activity during the quarter. One of the most significant lease transactions in the sector during the period was Mirion Technologies, which renewed its lease for 43,476 square feet in Irvine.
The research and development market had a vacancy rate of 3.1% at the end of the quarter, reflecting a 3.3% increase from both the prior quarter and year-over-year.
The airport area and North Orange County had the lowest vacancy rates of the quarter, at 1.9% and 3%, respectively. The South OC submarket led the county with a 4.3% vacancy rate at the end of the quarter.
Consistently low vacancy rates have continued to push up asking rates throughout the market. The overall average asking lease rate increased 3 cents from the fourth quarter to 92 cents per square foot at the end of the first quarter.
South OC
The South Orange County submarket remained the premier location for research and development space, with an average asking rate of 98 cents per square foot, which led the county by 6 cents per square foot. Landlords, with no research and development space under construction and user demand rising, are expected to raise asking rates throughout the year and to charge a premium for quality space.
Data and analysis provided by CBRE Research
