Orange County Vacancy Continues to Decline
The Orange County office market closed third quarter 2016 on a positive note as net absorption recorded positive 489,800 SF and vacancy declined by 120 basis points. 1.2 million SF of new construction is expected to come online in 2017 along with new additional planned development in the pipeline. The new inventory provides opportunities for tenants seeking large blocks of Class A office space.
As space options have become limited with vacancy declining, asking rental rates have increased by 9.7% from one year ago. The Orange County office market will continue to be a target area for professional service tenants who are looking for space alternatives outside of Los Angeles and San Diego counties.
The Orange County office market trends continue to move with positive momentum as vacancy rates continue to decline and overall absorption remains positive.
Asking rental rates stayed flat compared to last quarter, recording at $2.48 per square foot (PSF) full service gross (FSG). This is a 9.7% increase from one year ago.
Overall vacancy fell 120 basis points from last quarter to 11.8%. This is a decrease of 100 basis points from one year ago.
Leasing activity declined from second quarter recording 1.4 million SF, which was last seen second quarter of 2014.
The overall economy continued to see solid growth in third quarter. The Orange County unemployment rate has declined from 4.6% to 4.4% year-over-year.
The third quarter of 2016 proved to be positive for the Orange County office market as vacancy continues to decrease and absorption remains positive. Along with the new Class A trophy building construction and creative office redevelopment the market will continue to grow. Although asking rental rates flattened during third quarter, positive momentum is expected to carry through 2017.