Sublease space in Orange County’s office market continues to hit record highs, according to local brokerage data.
There’s roughly 4.5 million square feet of sublet office space available locally, nearly twice the amount seen prior to the pandemic, according to data from Avison Young.
Large blocks of space are available at prominent office campuses across the region, from Irvine’s Google Center and Park Place campuses to Costa Mesa’s Pacific Arts Plaza and Offices at South Coast Plaza, according to the brokerage’s data.
“We are seeing more space becoming available as many companies lower their space requirements based on the prevailing hybrid or flexible work environment,” Avison Young said in a new report.
Current sublet space availability is at its highest point in more than a decade, and is up 88% from the end of 2019, and up from roughly 4.3 million at the end of last year.
Orange County’s office market runs over 90 million square feet, with almost 45 million square feet designated as higher-end, Class A space, according to data from Cushman & Wakefield.
The area around John Wayne Airport remains OC’s largest office market, with nearly 40 million square feet of space, according to C&W’s data.
Vacancy, Usage
Orange County office vacancies are on the rise, climbing to 16.9% during the first quarter from 15.8% at the end of 2022, according to Voit Real Estate Services.
Actual office usage is hovering around 50%, sources tell the Business Journal, as employers struggle to get employees back in the office on a full-time basis, or shrink their footprint to save costs and support a more hybrid workforce.
New office projects in Irvine that have outperformed other properties in recent years and have managed to near full occupancy in the wake of the pandemic, are facing that same struggle as actual office usage remains on a plateau.
Class A office space, in fact, is facing the greatest vacancy rates of all office types, climbing to 22.4% during the first quarter. Class A office space represents nearly 44% of the county’s base inventory, according to Voit.
Some larger tenants at the recently built Spectrum Terrace office complex, for example, are looking to sublease part of their spaces in lieu of ongoing remote work trends.
Data analytics firm Alteryx Inc. (Nasdaq: AYX) opted to consolidate from two buildings at the complex to one near the start of the year, regulatory filings indicate.
Apple Inc., meanwhile, may be in the market for additional Orange County space, sources tell the Business Journal.
The firm inked a deal last year to occupy a full building as part of the third and final phase of development at Irvine Co.’s Spectrum Terrace and it appears to be using every bit of that space, with a mandate for all employees to return to the office at least three times per week.
Availabilities
In one of the larger availabilities in Orange County, the Los Angeles Chargers put its headquarters at Costa Mesa’s Hive complex up for sublease earlier this year, marketing roughly 101,000 square feet of office space at 3333 Susan St.
The retrenchment is not due to market factors, rather the NFL team is preparing to move into new corporate space in El Segundo, where it leased a deal in 2021 to occupy 145,000 square feet in a new facility expected to deliver in Spring 2024.
Coworking company WeWork Inc. could also provide a source for new leasing opportunities.
The firm, which last month shuttered its roughly 75,000-square-foot location at the Lakeshore Towers office campus near the John Wayne Airport, may give back another local outpost soon, sources tell the Business Journal.
The company currently has six open OC locations totaling some 315,000 square feet, including spaces at The Boardwalk and at 200 Spectrum Center.
In the largest block of office space available in Orange County—considering sublease and direct lease opportunities—the entirety of the Google campus in Irvine at 19500 Jamboree Road is available for lease, with the 210,280-square-foot building just 14% occupied.
A large portion of the One MacArthur tower in the South Coast Metro is also available on a direct and sublease basis.
New York-based private equity firm Angelo Gordon & Co. and Santa Monica-based Ocean West Capital Partners own the 212,000-square-foot office, paying $54 million for it in 2019 from Chicago-based EQ Office, which manages the building.
