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6/20/23
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MARKET HIGHLIGHTS
• The direct market vacancy rate in Orange County is now 12.6%.
• The average asking price on a full-service basis was $2.68/SF.
• During 2Q2023, 270k sf will still be under construction.
Market Drivers
The office market could be impacted by an equilibrium between the supply of available office space and the demand from companies looking to rent or buy offices. It has compelled landlords to establish a more tenant-friendly market with lower rental prices and offer additional incentives.
As a result, tenants are venturing away from high-rise buildings in favor of campus-like, low-rise offices, which are more equipped to offer outdoor workspaces and free surface parking. Tenants may discover that rates for high-rise buildings have seen the most notable decrease.
In 23Q2, Axonics Inc will take up occupancy in two connected buildings in a recently fulfilled spec complex near the Irvine Spectrum, totaling 145k sf.
Economic Review
The economy of Orange County is still growing but at a slower rate. The market's most significant and densest high-quality office hubs are in the Irvine/Tustin Legacy and Irvine Spectrum Submarkets, followed by Newport Beach/Laguna Hills/Aliso Viejo. Local and national office investors are often concentrated in these regions. A few of these exchanges were offered for sale as part of proposals to revitalize various property types.
Near Term Outlook
Low-rise building demand has been more resilient. Tenants have preferred low-rise building types since they provide more convenience and frequently offer free parking. Presently being constructed in Orange County are several specialty office projects totaling 290k sf. One new project, The Press in Costa Mesa, was presented by Invesco and SteelWave in the third quarter of this year, highlighting recent completions.
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