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Orange County Market Reports

Orange County Office Market

Average Asking Rent (Price/SF/Mo) $2.58
Vacancy Rate (%) 10.7%
Net Absorption (SF) 232,298

The average asking rent continued to climb, reaching a new cyclical high of $2.58/SF. The current rent is 6.7% below last cycle's high recorded in 2007, allowing room for additional growth. Net absorption was flat in the second quarter of 2017 with 232,298 square feet. At the submarket-level, the largest absorption gain occurred in Central County. Quarterly absorption and construction deliveries (212,000 square feet) were balanced. This caused vacancy to hover at 10.7%, a cyclical low. Sublet space is fairly moderate and represents just 2.3% of existing office inventory, which parallels the market's 10-year average. Under construction speculative space totaled nearly 1.4 million square feet, a new cyclical high. The Quad at Discovery Business Center, an Irvine Company project, broke ground this quarter and will deliver 370,000 square feet by mid-2018.

Orange County Industrial Market

Average Asking Rent (Price/SF/Mo) $0.99
Vacancy Rate (%) 1.9%
Net Absorption (SF) 44,524

The vacancy rate ended the second quarter of 2017 at 1.9%, flat compared with last quarter and hovering near a historic low. It was 150 basis points below last cycle's record low, recorded in 2007. Rents climbed to a new high. The second quarter's average asking rate was up 7.6% from one year ago. Coincidentally, it exceeded last cycle's peak (reached in 2008) by the same percentage. Quarterly net absorption remained positive despite limited supply and a lack of new construction. At the submarket level, North and South Counties posted the largest gains, while West County took a big hit. Only one speculative project was under construction during the quarter, a 144,008-square-foot building in Anaheim pre-leased to Rosendin Electric, Inc. Additionally, only one project was delivered this quarter, a 181,069 square-foot facility in Fullerton that was vacant upon completion. Limited land availability and entitlement barriers have constrained ground-up construction. Redevelopment projects are also rare since functionally obsolete industrial product is often more valuable as an alternate property type.

Orange County Office Market Report
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Orange County Industrial Market Report
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