Absorption in the Greater Airport Area office market in the third quarter was 83,307 square feet, compared to 37,956 square feet in the second quarter. That brought the year-to-date total for the submarket to 524,882 square feet, compared to 1,008,554 square feet for Orange County overall.
The submarket has a base of nearly 47 million square feet and is the largest office submarket in the county.
Vacancy Rate
The vacancy rate there was 12.7%, compared to 12.2% for the county as a whole. The vacancy rate a year earlier was 14.2% for the submarket and 13.7% for the county.
The flight-to-quality trend continued, with class A properties in the submarket attracting the lion’s share of the absorption, generating 129,728 square feet. Class B and C properties ended the quarter with -38,810 square feet and -7,611 square feet, respectively.
Average asking lease rates also rose slightly in the quarter to end at $2.01 per square foot, compared to $1.99 per square foot in the second quarter and an increase of 3 cents compared to a year ago. Class A properties’ average asking rate remained unchanged at $2.15 per square foot.
Construction
The Greater Airport Area has nearly 1.3 million square feet of office space under construction, including the Hyundai Motor America building in Fountain Valley, a new build-to-suit in Irvine totaling 110,000 square feet, and two buildings in Newport Center totaling 680,000 square feet.
The overall industrial market in the Greater Airport Area remained healthy. Activity increased at a moderate pace compared to the second quarter.
The vacancy rate for the manufacturing and warehouse sector decreased from 3% to 2.9%, and the vacancy rate in the research and development sector fell from 4% in the second quarter to 3.2%. The overall net absorption totaled 73,221 square feet, bringing the year-to-date total to 394,876 square feet.
Overall asking lease rates have been on an upward trend in the industrial sector. The research and development sector’s asking lease rates increased about 18% year-over-year, ending the quarter at 97 cents per square foot, while average asking lease rates in the manufacturing and warehouse sector increased 1.6% year-over-year to stand at 62 cents per square foot.
The submarket has had one of the most dramatic rent increases over the past 12 months and is expected to continue to trend upward through the end of the year.
Analysis provided by CBRE Research.
