The Orange County low-rise office market continued to be impacted by the lingering downturn at the end of 2009.
Unemployment levels in OC fell to 9.1% at the end of the fourth quarter, still below the statewide and national levels.
That may have helped spur an increase in tenant activity for the office market, although the speed of deals is still sporadic.
Low-rise office space accounts for slightly more than 55 million square feet in OC and carried a 15.5% vacancy rate in the fourth quarter.
The availability rate was 21.6%, which is a slight increase from 20.7% in the third quarter. Both the vacancy and availability rates have continued to increase in the past year, but those increases have begun to level off.
In the fourth quarter, low-rise office space in OC posted a negative absorption of 673,067 square feet, bringing the year-to-date total to negative 1.2 million square feet.
The South County submarket has contributed to 40% of the annual total with 492,300 square feet of negative absorption.
Because of the space givebacks, average asking rates have dropped throughout the year. In the fourth quarter alone, the average asking lease rate was down 8 cents to $2.03 per square foot and down 30 cents from one year earlier.
With office space construction at a basic standstill, the county has about 8.5 million square feet of vacant low-rise office space to lease.
Services providers have made the majority of large transactions to backfill office space, whether newly built or second generation space, but the fourth quarter was dominated by a number of small to midsize transactions.
Trapani is a first vice president for the Newport Beach office of CB Richard Ellis Group Inc.
