Orange County Real Estate Market Reports

Orange County Office Market

Vacancy dropped from 16.9% last quarter to 16.1% following a surge in net absorption. Total vacancy is 80 bps below the five-year average. Quarterly absorption totaled 786,717 SF in net gains, marking the ninth positive quarter in the last ten. This quarter’s top move-in was Hyundai occupying all of 2300 Main St, a 133,745-SF building in the Airport Area. Muted office demand is prompting developers to scrap planned office projects, leaving the construction pipeline empty for the first time since the Global Financial Crisis in 2008. The last project delivered over two years ago. Some underperforming office properties will find new life as multifamily, industrial or medical developments. This, along with owner-user sales, will exert downward pressure on the region’s office inventory, vacancy, and availability.

Orange County Industrial Market

This quarter marks the third in net absorption gains in the last 12 quarters, bringing the total to 359,103 SF. The top three move-ins of the quarter, which originate from South County, North County and Airport Area, totaled 379,673 SF alone. Vacancy (5.2%) is 230 basis points higher than it was two years ago but remains well below the peak of 6.8% seen during the Global Financial Crisis (reached in 2010). Orange County’s vacancy is the second lowest in the Southwest behind Los Angeles. After experiencing rapid growth and reaching an all-time high of $1.65/SF NNN three years ago, asking rents dropped to $1.51/SF NNN. Under-construction activity dropped to 1.3 MSF after four projects totaling 462,128 SF delivered. Nearly 30% of underway space has pre-leased to-date.