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 space absorption, and 2015 has been no different.
The good news is that Central and North Orange County office vacancies are trending lower, with the larger blocks of space becoming limited and no new construction on the horizon.
The North and Central OC submarkets, as a result, experienced a decline in vacancy rates and positive net absorption during the second quarter.
Central OC Market
The Central Orange County office market is comprised of approximately 16.6 million square feet in 284 buildings of over 30,000 square feet. The vacancy rate at the end of the second quarter was 12.2%, down 27.8% from the 16.9% recorded one year earlier.
Absorption was positive at 140,876 square feet, a significant increase over the negative 127,187 square feet recorded in the second quarter of 2014. The average asking lease rate was $1.87 per square foot, an increase of 3.9% year-over-year.
The North OC office market includes nearly 8.6 million square feet in 125 buildings that are more than 30,000 square feet.
Vacancy Rate
The overall vacancy rate dropped significantly from the second quarter of 2014, down 28.9% and ending the quarter at 10.6%. The drop generated positive net absorption totaling 150,305 square feet.
The average asking lease rate remained stagnant from last quarter at $1.94 per square foot.
The Central and North OC office markets are showing steady growth this year. The pendulum will eventually swing toward a landlord-driven market as class A rents tighten well over the $2-per-square-foot threshold and quality space becomes scarce.
Analysis provided by CBRE Research
