Orange County Office Market
Vacancy and availability rates were flat relative to last quarter but remain elevated by historical standards. Total vacancy was 18.5%, 330 bps above the five-year average. Net absorption broke a nine-quarter record high, totaling 188,084 SF in net gains. Office demand is muted and there is no office construction in the market for the first time since the Global Financial Crisis in 2008. The Irvine Company scrapped plans for a 532,000-SF life science campus at UCI Research Park and will now build a 1,200-unit apartment complex on the 19-acre site instead. Underperforming office projects are being slated for conversion to other uses. 35.2% of Orange County’s office inventory consists of buildings with sub-80% occupancy. Buildings with lower occupancy thresholds tend to struggle to generate positive NOI, making it difficult to support debt (if debt is present on a given building).
Download Orange County Office Market Report 1Q24
Orange County Industrial Market
Current leasing activity is subdued relative to 2021-2022. Limited occupancy gains amid a stream of tenant departures and downsizings resulted in the worst quarterly net absorption loss since 2017. Move-outs and vacant construction deliveries increased vacancy to 3.3%, up 60bps from last quarter. Available sublease space reached 2.3 MSF, up 12.5% from three months ago. Future sublet availability will likely fluctuate as tenants continue to reassess space needs. Under-construction activity totals 1.3 MSF, which is reminiscent of 2019, or just before the pandemic. Approximately 45.5% has pre-leased to date.
Download Orange County Industrial Market Report 1Q24