Q3 Vacancies Fall; ‘Creative Space’ Lands First Big Lease
Strong demand for Orange County office space continued in the third quarter as the vacancy rate settled at 10.3%. There was positive net absorption across all five of the county’s submarkets.
The rate of absorption could be healthier for much of the highly touted “creative space,” featuring open floorplans and highly designed common areas aimed at companies with younger workforces. In the last two years developers have spent millions of dollars to enhance more than 1 million sq. ft. of existing buildings in hopes of commanding premium rents. But of the largest projects only one, The Habitat in Irvine by Bixby Land Company, is leased up. Bixby signed Karma Automotive for the 242,462 sq. ft. project in August.
There has been a handful of 10,000-sq.-ft to 12,000-sq.-ft. leases, but none yet for the many available 40,000-sq.-ft. to 50,000-sq.-ft. blocks of space. One reason could be pricing. A project at the Airport is asking $4 per sq. ft. – more than for some nearby high-rise space. Another project in Anaheim is asking $2.85 per sq. ft., nearly equal to asking rates for Class A buildings at the Stadium.
Full Report Available 3Q 2016 Office Market Report OC