The low-rise segment of Orange County’s office market saw its vacancy rate fall to 11.1% in the fourth quarter from 12.1% the prior period and 13.6% a year earlier.
The low-rise segment accounts for about half of OC’s office market, which is estimated at 110 million square feet overall.
Tightening Trend
The decline in the vacancy rate continued a trend of tightening that goes back to the second half of 2010. The fourth quarter brought more momentum, with 560,994 square feet of positive net absorption for the quarter, taking the total for 2012 to nearly 1.3 million square feet.
The increased activity did not bring a boost on the average asking lease rate, which held at $1.78 for the fourth quarter compared with the prior period and about 2 cents below a year earlier.
Draw for Tenants
Low-rise buildings continue to draw tenants for a number of reasons, including free parking in many cases, and easier access compared with high-rise buildings that have parking structures rather than open lots.
High-rise buildings have traditionally been viewed as being able to provide more restaurants and other amenities for tenants, but food trucks and other mobile service providers have cut into that point of difference.
Low-rises also have taken advantage of recent demand for trendy, innovative, and collaborative spaces, renovating buildings to provide exposed ceilings and polished concrete floors.
Lindee is a senior associate in the Newport Beach office of CBRE.
The Real Estate Watch Chart
Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
