A string of deals in the 5,000- to 10,000-square-foot range sparked more hopes of a comeback in Orange County’s low-rise office market in the fourth quarter.
Some observers also view the activity as an indicator of consumer confidence. Unemployment here declined to 8.9% from 9.6% in the prior period. The rate likely reflects some individuals who have stopped looking for work, so it might not be as rosy as it appears at face value.
The local jobless rate is well below the statewide level of 12.3% though, and low-rise offices are a staple of local employment.
The low-rise market accounts for more than 55 million square feet. The vacancy rate in the segment decreased to 14.9% in the fourth quarter. That’s a slight improvement from the third quarter and a moderate gain compared to a year earlier.
The availability rate decreased slightly to 20% from the prior quarter.
The recent performance also marked the third consecutive period that the county has seen decreases in both vacancy and availability rates for low-rise offices.
The gains amounted to positive net absorption of 92,064 square feet, bringing the year-to-date total to 253,152 square feet. The area around John Wayne Airport accounted for a majority of the annual total, with 143,420 square feet of positive net absorption.
The absorption and improvement on vacancies helped slow the rate of decline in average lease rates for low-rise office space. The average asking lease rate fell by two cents to $1.85 per square foot per month in the fourth quarter from the prior period. It fell by 18 cents from a year ago.
The county saw no construction of low-rise office projects in the fourth quarter, and no new projects are planned for the immediate future.
Bourne is a senior associate for the Newport Beach office of CB Richard Ellis.
