GlobeSt.com EXCLUSIVE: Office Market Racks Up Strong Showing

ANAHEIM, CA-What seemed to be tentative signs of a turnaround just a few quarters ago has turned into a sustained recovery in the Orange County office market, according to a new report from Voit Commercial Brokerage. The three months that ended Sept. 30 turned out to be “another outstanding quarter,” Voit VP and researchchief Jerry Holdner tells GlobeSt.com. The market absorbed 1.1 million sf of space, boosting the total absorption to 2.3 million sf for the year and more than 6.2 million sf of absorption in the past nine quarters, Holdner notes. “With all that positive absorption, we’re finally starting to see rates rise as well,” Holdner tells GlobeSt.com. The current full service gross rate is $2.05, an increase of 2.5% when compared to last year, when the rate was $2. The period ending Sept. 30 marked the third consecutive quarter in which the county’s average rental rate increased, which represents a turnaround fromthe previous eight quarters in which rates either stalled or declined. If demand for space continues as it has in recent quarters, rental rates should continue to climb, Holdner says. The Orange County office vacancy rate stood at 10.5% at the end of the quarter, which is lower than last quarter, when it was nearly 11.7%. Much of the improvement in the vacancy rate and absorption are the results of bustling activity in the South County andthe Airport Area submarkets, which have absorbed slightly more than two million sf of space in the last three quarters. The total amount of office space available in Orange County, including both direct and sublease space, is also lower, slightly more than 13.7% in the third quarter, down from 5.6% in the third quarter of 2003. Total space under construction stood at just above 450,000 sf for the third quarter, a decrease of 28% when compared to what was under construction during the third quarter of 2003.