Voit Report: Orange County Office Market Posts Highest Positive Net Absorption in 27 Quarters
Judith Brower/Jenn Quader
Brower, Miller & Cole
VOIT REPORT: ORANGE COUNTY OFFICE MARKET POSTS HIGHEST
POSITIVE NET ABSORPTION IN 27 QUARTERS
• Q2 2012 Market Report reveals highest positive absorption in a single quarter since Q3 2005.
• Expansion of large companies in the OC office market indicates continued stability for the coming quarters.
• Both vacancy and availability decreased from the previous quarter.
Orange County, Calif., (July 05, 2012) – In the second quarter of 2012, the Orange County office market posted 955,283 square feet of positive net absorption - the most positive net absorption seen in a single quarter since the third quarter of 2005, according to the Second Quarter Market Report from Voit Real Estate Services. In addition, both vacancy and availability decreased from the previous quarter.
“The Orange County office market is showing significant improvement with strong indications that this recovery will continue,” said Jerry Holdner, Vice President of Market Research at Voit. “Even after this quarter’s substantial positive absorption, we expect to see more positive absorption in Q3 and Q4 of this year.”
Orange County business expansions will contribute to this increase, according to Holder, who noted that major companies are currently growing their footprints in the market.
“There are already commitments which will affect office absorption in Q3,” explained Holdner. “CoreLogic will move into a 170,000 square-foot office space in the Spectrum in August of 2012, while A to Z Development, which occupies 23,000 square feet in the same building, will expand to 82,000 square feet.”
Research-oriented businesses such as IT, defense, medical, and alternative energy will lead the charge of positive absorption over the next few years, added Holdner.
As companies continue to absorb space, vacancy and availability will continue to decline. The Orange County office market ended the second quarter of 2012 with lower vacancy and availability than prior quarters, which is a positive indication that the office market continues to improve, according to Holdner.
Vacancy in direct/sublease space finished the quarter at 14.44 percent, a significant decrease from the Great-Recession peak of 18 percent reported in Q2 of 2010. Availability also decreased in 2012’s second quarter, with all space being marketed (including direct, sublet, and occupied) dropping to 19.16 percent - a decrease of almost 5.0 percent when compared to 2011’s second quarter rate of 20.14 percent.
“As occupancy increases and lease rates continue to firm up, we will begin to see tenants and landlords agreeing to longer lease terms,” said Holdner. “In addition, as office product becomes depleted, we expect that lease rates will increase in late 2012 or early 2013.”
Voit’s Q2 office market report also indicates a continued downward trend in the amount of vacant office space being added per quarter, and Voit predicts an overall increase in investment activity in the coming quarters as lenders continue to dispose of distressed assets.
“Each of these factors supports sustained improvement in Orange County’s office market,” said Holdner. “As long as job creation continues to increase and consumer confidence stabilizes, we expect this recovery to continue.”
About Voit Real Estate Services
Voit Real Estate Services is now a 10 office commercial real estate firm that, through its brokerage and asset services professionals working together, provides strategic property solutions tailored to clients’ needs. Combining 40 years of expertise in brokerage, investment advisory, financial analysis, market research, asset management, tenant advisory and property management services, Voit provides clients with forward looking strategies that create value for their assets and portfolios.
Voit is a privately held, debt-free firm that has successfully navigated numerous market cycles since 1971 and currently employs more than 250 people. Voit has owned, developed and managed over 50 million square feet of commercial real estate, participated in $1.4 billion of construction projects and completed over $36 billion in brokerage transaction volume. Further information is available at www.voitco.com.