The latest Office Research Report for the county, published by Marcus & Millichap, highlights a number of factors that lend credence to the report's 12-month projections for this year. Key among those factors is job growth, which is expected to decline 0.5% to a rate of 2.5% for the year, possibly having a negative impact on the demand for office space. Still, the county reached a record low 2.3% unemployment rate in 2000. That, combined with continued job growth in the high-tech sector, bode well for continued strength in the local economy.

On the heels of 5.2 million sf of completed office space in 2000, the report calls for an additional 4.5 million sf of space to be built. If projections for slower job growth come to fruition, most likely the rate of absorption of that new space will decline.

At year's end, the average vacancy rate in Orange County was 8.5%, with the Airport/Irvine submarket as the best performer with a 6% vacancy rate. However, as the economy continues to cool, aggressive construction activity may flood the market, and demand may decline as fewer jobs are created. In the end, the report forecasts a 1.5% increase in the vacancy rate and a 0.5% decline in rents for the year.