The Central and North Orange County office submarkets have traditionally trailed the Greater Airport Area and South Orange County office submarkets in terms of vacancy, average asking lease rates, and absorption of space, and last year was no different.
The good news is that Central and North Orange County office vacancies were trending lower, and the larger blocks of space are becoming limited, with no new construction on the horizon.
The Central Orange County office market is comprised of approximately 16.6 million square feet in 284 buildings over 30,000 square feet. Its vacancy rate at the end of the quarter was 12.4%, down 11.4% from the 14% recorded one year earlier.
Absorption was negative at 39,021 square feet, though the annual net absorption remained positive at 260,477 square feet. The average asking lease rate was $1.97 per square foot, an increase of 10.7% year-over-year.
The North Orange County Office market includes 8.6 million square feet in 124 buildings over 30,000 square feet. The overall vacancy rate dropped significantly from the fourth quarter of 2014, down 34.1%, to end the quarter at 9.1%.
Net absorption was positive in the North Orange County submarket, ending the quarter at 54,924 square feet.
The annual net absorption was also positive at 327,785 square feet. The average asking lease rate increased 8 cents from the third quarter to $2.10 per square foot and was up 8.2% year-over-year.
The Central and North Orange County office markets showed steady and positive growth last year.
As class A rents continue their upward trajectory, well over the $2-per-square-foot threshold, and quality space becomes scarce, the pendulum will eventually swing toward a landlord-driven market.
Analysis provided by CBRE Research
