The South Orange County’s office market continued to produce positive net absorption in the second quarter.
There was a total 137,445 square feet of net absorption in the quarter.
The vacancy rate, in a related trend, continued to decline and by the end of June was down 23% from a year ago, at 12.2%.
That’s encouraging news for landlords but gives a warning to tenants that a bottom may be forming.
South OC monthly asking rents remained the same as in the first quarter, down only 3 cents from a year ago to $1.95 per square foot.
That may be another indication that we may be entering a “long bottom” in the cycle until another 3% to 4% of the vacancy is burned off through additional positive absorption.
Employment is the key to sustaining the market.
The current unemployment rate for the county now stands at 7.9%, well below what it was in July 2011. The vacancy rate—if employment continues to improve—will continue to decline, and lease rates will eventually increase, once the vacancy levels reach 10% or so.
Nourse is a senior vice president in the Newport Beach office of CBRE Group Inc.
The Real Estate Watch Chart
Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
