— By Sebastian Bernt and Erick Parulan of Avison Young —
The Orange County office market continues to show resilience, particularly compared to urban centers like Downtown Los Angeles. Its suburban environment, coupled with higher office utilization rates, has made it an attractive option for businesses adapting to evolving workplace strategies. As a result, leasing activity has remained steady with availability stabilizing and tenant demand holding firm.
Total leasing volume reached 1.6 million square feet in the fourth quarter of 2024, bringing the annual total to 7.8 million square feet. Notable transactions included Willow Laboratories, which signed a 63,440-square-foot lease at 121 Theory Drive in Irvine, and Acrisure, which secured 59,409 square feet at 611 Anton Blvd in Costa Mesa. While leasing slowed slightly in the fourth quarter, demand for modern, amenity-rich office spaces remained strong as companies continued implementing return-to-office strategies. This demand has pushed average asking lease rates to $35.05 per square foot, reflecting a broader shift toward high-quality, collaborative work environments that prioritize employee engagement and workplace experience.
Orange County’s growing residential appeal has further fueled office demand as young professionals and families increasingly opt for a suburban lifestyle. As a result, companies are prioritizing locations with shorter commutes and proximity to key residential hubs. This has led to strong leasing momentum in high-demand submarkets, including Irvine, Irvine Spectrum, Costa Mesa and Newport Beach, particularly in Class A office properties.
On the investment front, the market is showing signs of stabilization, with total office availability plateauing at 21.8 percent in fourth-quarter 2024. This suggests a balancing of supply and demand dynamics. While transaction volume remains below 2021 peaks — partly due to the continued trend of office-to-industrial conversions — investment activity has started to rebound. The largest transaction of the quarter was OCTA’s acquisition of 2677 N. Main Street in Santa Ana for $54.5 million ($247 per square foot). Gaines Investment Trust also purchased 2600 Michelson Drive in Irvine for $42 million ($135 per square foot).
Total office sales reached $227 million in the fourth quarter of last year, reflecting renewed investor confidence, particularly among buyers looking to capitalize on discounted office properties. Recent Federal Reserve rate cuts have also contributed to this momentum, making office assets more attractive as borrowing costs ease and pricing adjustments create opportunities for value-driven acquisitions. While the market has yet to fully recover, these early indicators suggest a gradual return of investor interest, particularly for well-located properties with strong long-term potential.
With three consecutive quarters of positive net absorption, Orange County’s office market is on a measured path to recovery. Compared to the broader Southern California region, it has outperformed key office markets like Los Angeles and San Diego. As companies refine their return-to-office strategies, demand for high-quality, well-located office space is expected to support leasing activity in 2025.
— By Sebastian Bernt, Market Intelligence Analyst, and Erick Parulan, Manager, Avison Young. This article was originally published in the February 2025 issue of Western Real Estate Business.