The Office Sector Continues to Perform
The Orange County office sector continues to see falling vacancy rates, positive net absorption and rising asking rates. Orange County has beaten the U.S. national average for office vacancy since the fourth quarter of 2014. Office vacancy fell to 8.9 percent in the third quarter, down from 9.4 percent in the second quarter and 9.9 percent in the first quarter of 2016. We continue to see positive net absorption to the tune of 626,900 square feet, but that number is down from 730,844 square feet in the second quarter, a difference of 15,044 square feet. Asking rates continue to trend upward from $27.61 per square foot to $27.73 per square foot annually. Class A buildings lead the way, with asking rates averaging $32.89 per square foot. Class B and C buildings come in at $26.28 per square foot and $21.57 per square foot, respectively. These are all good signs for the new development coming to market in 2017.
One of the more notable projects to soon come to fruition is 400 Spectrum Center Drive in Irvine. This 466,696-square-foot, Class A office tower is expected to be complete in the third quarter of 2017. This will be the sister tower to the Irvine Company’s most recent project at 200 Spectrum Center Drive, which was delivered in the first quarter of 2016 and is already 78 percent occupied. They boast an all-glass exterior, high-end gym, and close proximity to restaurants, shopping and entertainment. The upcoming tower is currently 8 percent preleased.
Airport Area tenants looking for space in 2017 will also receive a few new options. There is Trammell Crow Company’s Boardwalk, a 537,224-square-foot, nine-story creative office project with plenty of onsite amenities. The project is expected to arrive on the scene in the third quarter of 2017.
South County will also see two major build-to-suit projects in 2017. Broadcom’s new corporate campus within the Orange County Great Park will include four buildings totaling 880,000 square feet of Class A office space for the semiconductor giant. MicroVention will also receive a new home at 55 Enterprise in Aliso Viejo, with 205,000 square feet of campus style office space.
Both existing and newcoming tenants to Orange County are in search of more modern, efficient, amenity-rich places to work, and developers are not disappointing.
— By Russ Smith, Senior Associate and Office Specialist, Wind Water Realty. This article first appeared in the November 2016 issue of Western Real Estate Business magazine.