The Orange County low-rise office market continued to show signs of a slow recovery in the first quarter as some tenants took advantage of low rental rates to expand with long-term leases.
The recovery appears to be getting help from declining unemployment here. The county’s 8.9% jobless rate for the first quarter was down from 9.5% at the end of 2010 and the lowest since mid-2009.
The low-rise office market accounts for slightly more than 55 million square feet.
The segment saw its vacancy rate drop to 14.2% in the first quarter, from 14.8% in the prior period and 15.4% a year earlier.
The availability rate decreased to 20% from 20.8% from the previous quarter.
The first quarter saw decreases in vacancy and availability rates for low-rise offices for the third straight quarter.
The activity amounted to 177,878 square feet of net absorption.
North Orange County and the airport/coastal areas combined for 249,349 square feet of the gain, offsetting negative trends elsewhere.
South Orange County was hit hardest with 129,681 square feet of negative net absorption.
The overall gain on absorption came as declines on asking rents slowed.
The average asking lease rate in the first quarter was $1.83 per square foot. That was down two cents from the prior quarter and 16 cents from a year ago.
Slow improvements in the market have seen some landlords get higher annual rent increases and offer fewer concessions to new tenants.
It wasn’t enough to prompt any new low-rise office projects in the first quarter and none are planned for the immediate future.
Black is a senior associate for CB Richard Ellis Group Inc.
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Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
