Market Reports

VACANCY IS LOWEST SINCE 2019; OC RANKED SIXTH COSTLIEST Strong merchant demand in the second quarter drove down the countywide vacancy rate to 3.5%, the lowest since 2019. Second-quarter net absorption totaled 177,260 SF. Available space hit a near decade low of about 2.63 million SF, or 3.3% of the 79.1-million-SF inventory. Sublet space available in Q2 totaled 152,106 SF, down from 418,627 SF in the last two years. There are 21 properties under construction…

DEMAND SPUTTERS, VACANCY GAINS, SUBLEASES HIT RECORD After two quarters of positive net absorption, tenant demand fell into the red in the second quarter and has been negative for 12 of the last 14 quarters. Also, space available for sublease hit a record, the pace of development has cooled and the overall vacancy rate is the highest in 15 years. Countywide second-quarter growth was negative 227,986 SF with the Airport and South County markets reporting…

TENANT GROWTH SURGE CONTINUES; SUBLET SPACE SLASHED The office market in the second quarter continued its strong recovery from the Covid freefall. The vacancy rate dropped below 13% for the first time since 2021. Available sublet space has been cut in half and is at its lowest in seven years. Countywide net absorption hit 346,503 SF in the second quarter, bringing the mid year total to 701,266 SF. Net absorption has been positive for 10…

VACANCY FALLS TO LOWEST LEVEL SINCE THE LOCKDOWN The countywide vacancy rate fell in the first quarter to 3.8%, the lowest level since the Covid lockdown five years ago. Available space in Q1 hit a near-decade low of about 2.8 million SF, or 3.6% of the 78.9-million-SF inventory. Sublet space in Q1 fell to 92,364 SF, down from 418,627 SF in the last two years. Well-located vacancies fill quickly. Institutional-quality space is tight, and most…

MODEST DEMAND RETURNS IN Q1 AFTER RENTS SLIDE 12% Positive net absorption returned countywide for the second straight quarter, led by modest tenant expansion in the Airport and West County submarkets. The recent overall growth follows 11 consecutive quarters of declining user demand totaling -9.5 million SF amid increasing supply. The countywide vacancy rate was pushed up from a record low  of 1.8% to 6.6%. The nationwide average is 7.5%. Since 2022, 5 million SF…

TENANT GROWTH TREND CONTINUES AMID SHRINKING SUPPLY Healthy tenant demand continued in the first quarter that also saw further inventory reductions from redevelopment and owner-users buying buildings at deeply discounted prices. Countywide net absorption totaled 198,474 SF in the first quarter and follows two years of tenant growth totaling 2.2 million SF, the most since the Covid lockdown. But leasing activity remains about 10% less than prior to the pandemic. The Q1 growth was led…

RECOVERY GAINS WITH SECOND STRAIGHT YEAR OF NET GROWTH The Orange County office market continued to shake off the debilitating effects of Covid with more than 1 million SF of net absorption for the second straight year. The strong tenant demand drove down the countywide vacancy rate to 13.7%, the lowest level in more than three years. A weak start to 2025 was offset by a second-half demand surge of more than 1.6 million SF….

MODEST TENANT GROWTH ENDS RECORD SLIDE; RENTS OFF 11% Positive tenant demand returned in the fourth quarter, ending the county’s largest and longest contraction on record at 11 straight quarters of negative net absorption totaling 9.3 million SF, or 3.4% of the total inventory. Despite the Q4 improvement, net absorption for the year was 1.8 million SF in the red. The nearly three-year slide pushed up the average vacancy rate from a lowest-in-the-nation 1.8% to…

DEMAND FOR SPACE, LEASE RATES CONTINUE TO FALL IN Q3 The long-running easing trend in overall industrial demand continued in the third quarter as lease rates slipped and countywide vacancy climbed to its highest level since 2011, the aftermath of the Great Recession. Net absorption in the third quarter was negative 850,291 SF. It was the greatest quarterly loss this year and a record 11th straight quarter of tenant contraction, during which the vacancy rate…