Orange County Real Estate Market Reports

Orange County Office Market

Vacancy rose to 17.5%, marking the first increase after seven consecutive quarters of decline. Total vacancy is 110 bps above the five-year average. Quarterly absorption dropped to -411,436 SF following seven consecutive quarters of net gains. The drop was mainly driven by limited move-ins, the largest being Serendipity Labs occupying 39,053 SF at 3200 Park Center Dr. 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 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

Net absorption turned positive for the first time in ten quarters, with 81,171 SF. LeGrand occupying 194,375-SF of space in Anaheim and Bear Down Brands settling into 139,449-SF space in Fullerton were among this quarter’s top move-ins. Vacancy (5.0%) is 260 basis points higher than it was two years ago but remains well below the peak of 6.7% seen during the Global Financial Crisis (reached in 2010). Orange County’s vacancy is among the lowest across the Southwest region. After experiencing rapid growth and reaching an all-time high of $1.65/SF NNN two years ago, asking rents dropped to $1.54/SF NNN. Under-construction activity dropped to 1.8 MSF after three projects totaling 429,630 SF delivered, bringing pre-leasing levels to 6.6% of overall construction.