Partnership. Performance.
FIRST QUARTER 2015
Orange County Office Market Report
Avison Young - Irvine
2030 Main Street, Suite 150
Irvine, CA 92614
Vacancy Rates
Net Absorption
Partnership. Performance.
Market Overview
Market Snapshot
Asking Rent
Competition Escalates For Orange County Office Space
Orange County continues to see increasing demand for a tightening office supply, while prices are pushed up. 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 the state at 4.6% as of the end of the first quarter for 2015. Economic growth and impressive employment rates, combined with high occupancy and subsequent elevating rents, are fueling leasing activity.
Demand is still on the rise for flexible and mixed-use designs that cater to the needs of the evolving modern office worker. Increased demand for medical office space is another dynamic component of the county’s leasing activity. Demand for increasingly specific needs in office space will insure a healthy cycle of movement within the real estate market.
The first quarter of 2015 closed with a 10.0% vacancy rate, down from 11.9% in the same quarter of the previous year, trending down consistently, year-over-year, since the start of 2010. Rental rates jumped to $2.12 gross, surpassing the $1.97 gross seen in the first quarter of 2014. This makes a tenth quarter of rental increases for the county, and it is a course that is expected to continue through 2015. Current rents are still well below the highs of $2.75 gross that were seen in 2007, indicating that there is a considerable amount of bandwidth that the market is capable of growing to. Total net absorption stayed positive at 140,164 sf by the end of the first quarter.
As of the first quarter of 2015, there was one office building delivered, totaling 21,311 sf. The first new office building of the year features LEED Gold shell and core construction. At this time, there are three new investment grade office properties currently under construction, amounting to a total of 542,595 sf of new inventory that will soon be added to the market. The largest of which is located in Irvine, with 425,044 sf, featuring LEED Gold certification design standards, and has no tenant pre-commitments. The remaining buildings will be completed within a year, and each still have available space on the market. 2015 won’t see the same volume of construction delivery as the previous year, with 1,442,761 sf added in 2014. However, developers are still moving forward, albeit cautiously since the recession. There is currently over 5.4 million sf of proposed office space poised on the side-lines and actively being marketed.
First 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 5.4 msf of proposed office space reported in Orange County, 67% of the volume is located in Irvine and 27% of the volume is split 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 3.5% over the past three years. There are approximately 3,114,363 people living in Orange County as of 2013. The fastest growing
occupations in Orange County are forecast to be in Fashion, Health Care Services, Construction, Loan Officers, Information Technology and Marketing.
Orange County: Improving
Feb 2015 4.6%
Feb 2014
6.0%
Feb 2015 6.7%
Feb 2014
8.0%
United States: Improving
Feb 2015 5.5%
Feb 2014
6.7%
U n e m p l o y m e n t R a t e s
G e o g r a p h i c C o v e r a g e
North County Anaheim Hills Brea Buena Park Fullerton La Habra La Palma Placentia Yorba Linda South County Aliso Viejo Dana Point Foothill RAnch Irvine Spectrum Laguna Beach Laguna Hills Laguna Niguel Lake Forest Mission Viejo Rancho Santa Margarita San Clemente San Juan CapistranoWest County Cypress Fountain Valley Garden Grove Huntington Beach Los Alamitos Seal Beach Stanton Westminster Airport Area Costa Mesa Irvine Newport Beach Central County Anaheim Orange Santa Ana Tustin 5 1 405 91 California: Improving
213.935.7435
chris.cooper@avisonyoung.com
Avison Young at a Glance
Contact Information - Southern California, United States
213.935.7430 323.851.6666
www.avisonyoung.com
310.899.1800 424.265.9200
Los Angeles - Downtown 555 S Flower St, Ste 3200 Los Angeles, CA 90071 Primary Contact: Ted Simpson ted.simpson@avisonyoung.com
Los Angeles - North 6711 Forest Lawn Dr Los Angeles, CA 90068 Primary Contact: Mark Evanoff mark.evanoff@avisonyoung.com Los Angeles - West
10940 Wilshire Blvd, Ste 2100 Los Angeles, CA 90024 Primary Contact: Neil Resnick neil.resnick@avisonyoung.com
Los Angeles - Santa Monica 301 Arizona Ave, Ste 303 Santa Monica, CA 90401 Primary Contact: Randy Starr randy.starr@avisonyoung.com
San Diego - La Jolla 4225 Executive Sqr, Ste 600 La Jolla, CA 92037
Primary Contact: Jerry Keeney jerry.keeney@avisonyoung.com 858.201.7070
Orange County - Irvine 2030 Main Street, Ste 150 Irvine, CA 92614
Primary Contact: Dan Vittone dan.vittone@avisonyoung.com 949.757.1190
858.201.7072
amber.jagers@avisonyoung.com
Report Prepared By:
Amber Jagers - Research Manager 4225 Executive Sqr, Ste 600 La Jolla, CA 92037
Regional Managing Director:
Chris Cooper - Corporate 555 S Flower St, Ste 3200 Los Angeles, CA 90071 Avison Young,
a real estate company committed to you.
Avison Young is the real estate partner businesses trust for intelligent, integrated solutions.
We deliver results that are aligned with your strategic business objectives, support real estate initiatives that add value, and build competitive advantage for your organization.
Avison Young is the world’s fastest-growing commercial real estate services firm. Headquartered in Toronto, Ontario, Avison Young is a collaborative, global firm owned and operated by its principals. Founded in 1978, the company comprises 1,700 real estate professionals in 66 offices, providing value-added, clientcentric investment sales, leasing, advisory, management, financing and mortgage placement services to owners and occupiers of office, retail, industrial and multi-family properties.
Avison Young is Canada’s largest independently owned commercial real estate services company.
Founded in 1978 as Graeme Young & Associates of Edmonton; Merged with and Avison & Associates in 1996 to form Avison Young.
In 2009, Avison Young began international expansion and has since opened 45 U.S. and 5 European offices.
In 2011-2014, Avison Young won designation as one of Canada’s Best Managed Companies, Canada’s most prestigious corporate award.
In 2015, Avison Young was named a Canada’s Best Managed Companies Gold Standard winner (2014).
