South Orange County’s overall commercial availability remains relatively high, but the recovery appears to be under way.
The number of deals in the first quarter and last year picked up dramatically versus 2009, when many companies put their real estate plans on hold.
After seeing sale prices and lease rates fall significantly from their peak in 2007, most experts now agree that we are at or near the bottom.
South County’s office vacancy of 15.9% and availability of 23.2% remain high.
Vacancy rates have dropped considerably since the fourth quarter’s 17.9%, which is a positive economic indicator for the submarket.
The average asking lease rate stands at $1.98 per square foot, a penny down from the fourth quarter.
Some companies are expanding and signing longer-term leases to take advantage of low lease rates.
Despite this up-side, South County posted negative net absorption of 79,000 square feet of office space in the first quarter.
A bright spot is a sizeable uptick in small industrial building sales.
Prices remain low and Small Business Administration fi-nancing remains at-tractive, creating an opportunity for bus-iness owners to buy for less than the cost of leasing.
The overall South County industrial market during the first quarter saw a slight rise in vacancy to 6.8% from 5.3% a year earlier. Availability rose to 11.6% from 11%.
Notably, South County’s April industrial vacancy rate dropped to 6.2%, meanwhile its availability rate rose to 11.8%.
Despite the current economic uncertainty, big deals are being made.
One of the larger deals this past quarter—an 110,000-square-foot sublease—happened in Irvine Spectrum, just off Bake Parkway and Irvine Boulevard.
Indicators suggest the South County market is stabilizing.
Values have not begun to recover yet, but the worst is behind us, creating an advantageous window of opportunity for businesses to negotiate a long-term lease or take advantage of low values and interest rates to purchase a building.
Burgner is an associate in the Newport Beach office of CB Richard Ellis Group Inc.
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