Despite overall leasing volume being lower than what was seen at this time a year ago, the market finished the quarter with a significant amount of positive net absorption thanks to a surge in deals being completed by both new and expanding tenants over the past two quarters, he adds.

“With most of that vacated space already slated to be backfilled by new tenants later this year, it is projected that the market will finish 2012 with lower total vacancy than where it was a year prior,” says Ingham.

Some landlords have already demonstrated confidence in the future recovery by being firmer on negotiations and, in some cases, pushing asking rents for the more desirable availabilities, says the JLL office report. “From a landlord’s perspective, the market is on an encouraging pace of recovery even though the first quarter threatened the hope that the progress made in 2011 would be sustained in 2012,” says Ingham. “From a tenant’s perspective, the window of opportunity to lock in market low rates is still open, but quickly closing as vacancies tighten.”

And from an investor’s perspective, the market has been quiet in the past six months with few large trades taking place, says Ingham.

On the industrial side, according to Luke McDaniel, SVP of JLL, despite an overall slow quarter in terms of leasing velocity, the Orange County industrial market appears to be stable with the potential of increased demand on the horizon. One of the biggest challenges the county’s industrial sector continues to face is the lack of quality class A property, says McDaniel.

He points out that demand for this property type is growing faster than any other class, but there are very few existing options for tenants. “Tenants that are not willing to relocate outside of Orange County but unable to find quality class A property to suit their needs have begun to consider class B product, which has seen more activity just recently than it has over the past few years,” he says. “Landlords with class C product continue to find difficulty in attracting new tenants to fill vacancies, and with several new class A developments slated to deliver over the next couple of years, the struggle is expected to be sustained for months to come.”

From a landlord’s perspective, continued job growth and low vacancies are things to be excited about for the future of demand, explains McDaniel. From a tenant’s perspective, the sector is still sitting near the bottom “which presents opportunities to lease space for favorable terms as business improves.”