Activity Ends 2018 On Positive Note

Key Takeaways:

  • The Orange County office market saw positive demand in the fourth quarter, recording 206,600 square feet of net absorption. Move-ins in the Airport Area and North County contributed to the growth in demand.
  • Growth of asking rental rates slowed by increasing only $0.02 from last quarter to $2.89 per square foot (PSF) full service gross (FSG).
  • The construction pipeline totals 1.3 million square feet, much of which is expected to be delivered in 2019.
  • The Airport Area accounted for the majority share of leasing volume for the quarter, accounting for 60% of all activity.
  • Orange County job growth increased by 7,700 jobs in the month of November. Largest annual job gains were recorded in professional and business services (+7,100) and educational and health services (+6,700). As of November 2018, the Orange County unemployment rate is still among the lowest in the nation at 2.8%.

Orange County Office Market:

The Orange County office market saw an increase in movement during the fourth quarter as leasing activity grew by 17% compared to last quarter. As tenants seek opportunities to right size and new construction delivers to the market, absorption gains are expected to be limited in coming quarters.

Outlook:

Moving into 2019, the Orange County market is expected to maintain positive momentum as the local economy remains strong. Although Class A asking rental rates are starting to stabilize, new developments coming online during the next year are expected to put upward pressure on asking rental rates. Orange County will remain a highly desirable market for traditional FIRE tenants as well as technology and manufacturer users.

 

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