Post on 29-Jul-2020
Partnership. Performance.
SECOND QUARTER 2015
Orange County Office Market Report
Avison Young - Irvine 2030 Main Street, Suite 150 Irvine, CA 92614949.757.1190
www.avisonyoung.com
Vacancy Rates
Net Absorption
Partnership. Performance.
SECOND QUARTER 2015
Market Overview
Orange County Office Market Report
Market Snapshot Asking Rent
* The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
Orange County Office Rents Take Off Amid Tightening Supply
Orange County continued to see increased competition for a tightening supply of office space that has resulted in rising prices. This thriving hub for financial services, information technology, logistics and health care has continued to attract a talented workforce. The region’s ideal geography and bustling tourism trade contribute to a high quality of life. Orange County boasts one of the lowest unemployment rates in California at 4.3% as of June 2015. Year-to-date, unemployment levels are on track to be significantly lower than the previous year for the county.
As of mid-2015, Orange County’s office vacancy reached 9.5%, after quarter-over-quarter decreases, and this marks a sharp decrease from the mid-year of 2014 when rates were at 11.5%. Office vacancy has hit single digits for the first time since 2007. As vacancy tightens, rental rates are registering a robust increase. At the end of the second quarter of 2015, the average asking rental rate for all classes was $2.18 psf full-service gross (FSG), up from $2.01 psf FSG one year earlier. Rents are increasing each quarter across every major submarket in the county with the highest rents found in the Airport Area at $2.42 psf FSG. The total net absorption for the second quarter of 2015 stayed positive at 562,278 sf, and more than 2.5m sf was recorded for the 12-month period ending June 30, 2015 in Orange County.
There are currently seven investment-grade office properties under construction in the county, amounting to nearly 711,000 sf of new inventory that will be added, almost entirely to the suburban markets. Approximately 73% of the new inventory will be available to the market with the remainder preleased. The largest project is located in Irvine. The 425,000-sf, LEED-Gold development has no prelease commitments. At the mid-point of 2015, there has been one new office delivery, also a LEED-Gold development, totalling 21,311 sf. The larger volume of new construction that was delivered in nearly equal proportions between both the downtown area and the suburbs in 2014 is not expected in 2015; however, developers are still moving forward, albeit cautiously since the recession. There is nearly 6.5m sf of proposed office development on record in the county.
Second Quarter 2015 | Orange County Office Report
M A J O R L E A S E T R A N S A C T I O N S
M A J O R S A L E T R A N S A C T I O N S
U N D E R C O N S T R U C T I O N
Of the 6.5 msf of proposed office space reported in Orange County, 68% of the volume is located in Irvine and 22% of the volume is split evenly between Tustin and Santa Ana.
The Leadership in Energy & Environmental Design program recognizes exceptional green building construction and operation. There are over 1,200 buildings in the Orange County at varying stages in LEED Certification achievment.
The population in Orange County is experiencing a faster growth rate than that of the state as a whole, expanding 4.5% over the past four years. There are approximately 3,145,515 people living in Orange County as of 2014.
* The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
Industries with the fastest projected employment in Orange County include, Health Care & Medical Research, Food Services, Sales & Marketing, Construction & Maintenance, Financial Services, and Information Tech.
O r a n g e C o u n t y R e g i o n s B y T h e N u m b e r s
Second Quarter 2015 | Orange County Office Report
* The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
Second Quarter 2015 | Orange County Office Report
* The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
United States: Improving
June 2015 5.3%
June 2014 6.3%
Orange County: Improving
June 2015 4.3%
June 2014 5.2%
California: Improving
June 2015 6.3%
June 2014 7.6%
U n e m p l o y m e n t R a t e s
Second Quarter 2015 | Orange County Office Report
G e o g r a p h i c C o v e r a g e
North County Anaheim HillsBreaBuena ParkFullertonLa HabraLa PalmaPlacentiaYorba Linda
South County Aliso ViejoDana PointFoothill RAnchIrvine SpectrumLaguna BeachLaguna HillsLaguna NiguelLake ForestMission ViejoRancho Santa MargaritaSan ClementeSan Juan Capistrano
West County CypressFountain ValleyGarden GroveHuntington BeachLos AlamitosSeal BeachStantonWestminster
Airport Area Costa MesaIrvineNewport Beach
Central County AnaheimOrangeSanta AnaTustin
51
405
91
WASHINGTON, DC
RALEIGH-DURHAM (2)
SUBURBAN MARYLAND
HALIFAX
NEW YORK CITY
ORANGE COUNTY DALLAS
HOUSTON
ATLANTA
WEST PALM BEACH (2)
BOSTON
PITTSBURGH
OTTAWA
DETRO
IT CHICAGO (2)
GUELPH
MISSISSAUGA
MONTREALEDMONTON
REGINAWINNIPEG
CALGARYVANCOUVER
LETHBRIDGE
DENVER
RENO
LAS VEGAS
SAN FRANCISCO
LOS ANGELES (4)
NEW JERSEY
TYSONS CORNER, VA
SOUTH CAROLINA (2)
TORONTO (2)
QUEBEC CITY
TORONTO NORTH
CHARLOTTE
SAN DIEGO
SACRAMENTO
SAN MATEO
FAIRFIELD/WESTCHESTER
LONG ISLAND
PHILADELPHIA
TAMPA
COLUMBUS
AUSTIN
OAKLAND
CLEVELAND
ORLANDO
MONCTON
FORT LAUDERDALE
MIAMI
MINNEAPOLIS
INDIANAPOLIS
LONDON
THAMES VALLEY
FRANKFURT
MUNICH
DUESSELDORF
HAMBURG
213.935.7435chris.cooper@avisonyoung.com
Avison Young at a Glance
Contact Information - Southern California, United States
213.935.7430 323.851.6666
www.avisonyoung.com
310.899.1800424.257.6474
Los Angeles - Downtown 555 S Flower St, Ste 3200Los Angeles, CA 90071 Primary Contact: Ted Simpsonted.simpson@avisonyoung.com
Los Angeles - North6711 Forest Lawn DrLos Angeles, CA 90068 Primary Contact: Mark Evanoff mark.evanoff@avisonyoung.com
Los Angeles - West10940 Wilshire Blvd, Ste 2100 Los Angeles, CA 90024 Primary Contact: Jonathan Larsen jonathan.larsen@avisonyoung.com
Los Angeles - Santa Monica 301 Arizona Ave, Ste 303 Santa Monica, CA 90401 Primary Contact: Randy Starrrandy.starr@avisonyoung.com
San Diego - La Jolla4225 Executive Sq, Ste 600 La Jolla, CA 92037Primary Contact: Jerry Keeney jerry.keeney@avisonyoung.com
858.201.7070
Orange County - Irvine 2030 Main Street, Ste 150 Irvine, CA 92614Primary Contact: Dan Vittonedan.vittone@avisonyoung.com
949.757.1190 858.201.7072amber.jagers@avisonyoung.com
Report Prepared By:Amber Jagers - Research Manager 4225 Executive Sq, Ste 600La Jolla, CA 92037
Regional Managing Director: Chris Cooper - Corporate 555 S Flower St, Ste 3200 Los Angeles, CA 90071
© 2015, Avison Young (Canada) Inc. The statistics contained in this report were obtained from sources deemed reliable, including Avison Young, Bureau of Labor Statistics, CoStar Group Inc., Real Capital Analytics, Inc., Reis Services, LLC, State of CA Employment Development Department, U.S. Green Building Council. However, Avison Young (Canada) Inc. does not guarantee the accuracy or completeness of the information presented, nor does it assume any responsibility or liability for any errors or omissions. All opinions expressed and data provided herein are subject to change without notice. This report cannot be reproduced in part or in full in any format without the prior written consent of Avison Young (Canada) Inc.
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