The North Orange County office market’s vacancy rate ended the second quarter at 15.3%, the result of absorption taking a hit at the beginning of the year, fueled mostly by three large move-outs totaling approximately 440,000 square feet.
The vacancy rate has increased nearly 33% over last year, but demand is picking up, and activity in the North OC office market is projected to increase in the coming months.
Rent
The vacancy rate was higher in the second quarter when compared to last year, but rent prices are still rising. The trailing 12 months show the average rent in the North Orange County region increased 3.2% to $1.92 per square foot. CBRE Econometric Advisors project rents to continue their upward trend, increasing 6.2% by the end of 2015.
There are 125 office buildings in the North Orange County market totaling approximately 8.5 million square feet. There were none under construction at the end of the quarter, as office development in Orange County has been slow to pick up.
The outlook for the North Orange County industrial market remains positive. The second quarter generated more than 1 million square feet of gross activity, resulting in 487,777 square feet of net absorption.
Year-to-date, gross activity totaled 1.8 million square feet, and net absorption totaled 519,627 square feet for the year.
Vacancies in the North Orange County industrial market remained the lowest in the county. Year-over-year, they decreased 20.5%, ending the second quarter at 1.8%.
Tenant demand remained strong, and the competition for quality space was tight.
Asking Lease Rate
The average asking lease rate, with the limited amount of availability in the market, has increased 7.4% over the past year. It’s expected to increase by an additional 7.3% by the end of 2015, according to CBRE Econometric Advisors.
There was 958,241 square feet under construction at the end of the quarter. That included the first two phases of the Anaheim Concourse Distribution Center, which totals approximately 864,000 square feet. The North Orange County industrial market is the most active submarket in the county in terms of development.
Analysis provided by CBRE Research
