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4/18/08
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Average asking rents for office space in Orange County continue to rise, despite a slowing economy and a notable jump in vacancy rates in the region following the implosion of the sub-prime market. The average asking full-service gross lease rate in Orange County is currently $2.73, which is a 3.8 percent increase over last year's first quarter rate of $2.63, according to Voit Commercial Brokerage's first quarter 2008 market reports.
"The last quarter of 2007 represented a record high rate of $2.77. While lease rates have dropped since then, they still remain at record high levels," said Jerry Holdner, Vice President of market research for Voit Commercial Brokerage.
The vacancy rate also increased from 12.43 percent from the last quarter of 2007 to 13.82 percent this quarter. As a reaction to the sharp increase in vacancy rates, the total space under construction in the first quarter of 2008 dropped dramatically by 81 percent from the amount that was under construction during the first quarter of 2007.
"The region's strong local economy and high quality of life continue to make Orange County a desirable location for business. For this reason, new businesses in the fields of biotechnology, high technology and healthcare are expanding inside Orange County," explained Holdner. "The increase in new types of business combined with reduced construction means we could see an increase in activity in the second half of 2008, brought about by pent up demand."
According to the State of California Employment Development Department, Orange County lost 21,800 payroll jobs over the last twelve months, most of which were in financial services. However, between January 2008 and February 2008 Orange County gained 6,500 jobs, mostly in the government, leisure and hospitality sectors. Going forward, Chapman University is forecasting 2.361 payroll jobs will be lost in 2008, UCLA is forecasting zero job creation and the LAEDC is forecasting 3,200 new jobs in 2008.
The unemployment rate in Orange County was 4.3 percent in February 2008, down from the revised 4.5 percent in January 2008 but above the year ago estimate of 3.6 percent. This compares with an unadjusted unemployment rate of 6.1 percent for California and 5.2 percent for the nation during the same period.
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