OC Office Market Stabilizes

ORANGE COUNTY, CA-The Orange County office market continued its recovery in the third quarter, according to a new report by CB Richard Ellis, which says the county showed positive absorption and stabilized vacancy rates.

Office employment increased by a total of 500 jobs for the second consecutive quarter, despite a 1.4% decline in the total employment throughout the county, the report says, while construction dropped to 1.2 million sf, compared with 3.3 million sf in the third quarter of 2001

.The study showed 294,344 sf of net absorption for the quarter, bringing the year-to-date total for the county up to 448,359 sf, while the amount of space that was physically vacant remained unchanged at 15.6%. The availability rate dropped in the third quarter to 19.6%, down from 20.4% in the second quarter.

The vacancy figures included an improvement in South Orange County, which was hit particularly hard in 2001 with tech industry woes. The South County vacancy dropped to 17.5%, down from 19.3% in the second quarter.

Average asking rents fell two cents in the third quarter to $2.08 per sf per month. As rates in the higher-rent areas are dropping faster and the lower-rent areas are stabilizing, the variance between market areas is tightening, the report says. Current average asking lease rates range from a high of $2.25 per sf per month foot in the Airport Area to a low of $1.71 in Central Orange County. A year ago the high was $2.52 and the low was $1.76, respectively, in those areas. Despite the increase of 1.4% in unemployment in the quarter, Orange County still maintains the lowest unemployment rate in Southern California at 4%, the report says.