Orange County remains one of the most resilient office markets in California, largely due to its diverse industry base.
Its high-rise office market, once focused mostly on professional-services tenants, has also diversified with a migration of tenants across all business sectors.
Meantime, big companies of all sorts have been taking advantage of lower recent rental rates by choosing to renew leases early or to relocate to a higher-quality building.
Such activity last year and in the first part of 2012 have meant an uptick in activity from small and midsize tenants as the economy improves.
OC’s net absorption in high-rise offices was still 92,636 square feet in the first quarter, significantly lower than the 301,876 square feet of office space absorbed in the final quarter of 2011.
South OC had the strongest net absorption of high-rise space at 71,301 square feet, followed by the Greater Airport Area, which absorbed 12,743 square feet.
North OC had negative net absorption in its high-rise space of 4,799 square feet.
Vacancy overall declined by nearly 300 basis points to 16.9% in high-rise space.
Landlords continue to be competitive with lease rates and concessions, with the average asking monthly lease rate down 1 cent from the fourth quarter of 2011, currently at $2.10 per square foot. The continuation of relatively stable lease rates over the last three quarters seems to indicate a bottoming-out in rental rates.
The largest high-rise office lease in the first quarter was at 40 Pacifica in Irvine.
Software developer a2z Development Center Inc., an Amazon Inc. subsidiary, leased 82,000 square feet in the building. With this lease, the tenant expanded from 30,000 square feet that it already occupied in the building, for a total of 112,000 square feet.
40 Pacifica was formerly occupied by the Federal Deposit Insurance Corp. and is owned by the Irvine Company of Newport Beach.
Stickel is a first vice president in the Newport Beach office of CBRE Group Inc.
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Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
