The vacancy rate continued to tighten in the fourth quarter for the high-rise office market in Orange County, which includes about 27 million square feet of space total in some 120 buildings.
The total vacancy rate, which includes vacant space for sublease, declined from about 15.56% in 2012’s third quarter to 15.3% in the fourth.
That capped a significant trend of progress for the segment, which started 2012 with a vacancy rate of 17.4%.
South OC
The submarket that saw the biggest drop in vacancy rates for high-rise offices over the course of last year was South OC, where the total vacancy rate declined to 6% from 11.5%.
The OC high-rise office market has benefited from growth in several concentrated areas, including the healthcare, banking and technology industries.
Employment, especially in the office sector, is the strongest indicator of likely demand for high-rise space.
Jobless Rate
Orange County saw its jobless rate decline from 7.8% in December 2011 to 6.8% in December 2012.
That compared with a 9.8% jobless rate statewide and 7.8% nationally. OC now has the fourth-lowest unemployment rate among the 20 largest office markets in the U.S.
Rent Hikes
Orange County’s decreasing vacancy rates, job growth and lack of speculative new construction led to the first rental-rate increase in five years here.
High-rise rents were part of the overall increase, with an average asking rate of $2.12 per square foot, up 4 cents from the prior period and a penny from a year earlier.
Chandler is a senior vice president in the Newport Beach office of CBRE Group Inc.
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