IRVINE, CA—Orange County has posted 247,895 SF of positive net absorption, marking the 4th straight quarter of net gains in occupancy. This according to The Newmark Grubb Knight Frank office Market Report for third quarter 2015, which was shared exclusively with GlobeSt, ahead ofits broader distribution.
· The market had positive net absorption in 18 of the last 21 quarters—mostly in the Anaheim-Santa Ana-Irvine areas.
· Rental rates ascended to new highs, with some rents surpassing $5.00/SF level.
· This is the first time that class A rents have exceeded $2.50 / SF since third quarter 2009
· The largest lease signed this quarter was Blizzard for 435,000 square feet – a renewal and expansion.
· Speedo USA took 68,815 square feet making it the second largest transaction.
· Construction activity is expected to gain steam, with nearly 2 MSF planned for development.
· And OC Office product continues to pull top dollar from investors.
The report describes the office market improvements as “slow and steady.”
Vacancy finished the quarter at 11.3%, down 30 basis points from second-quarter 2015 and down 210 basis points year-over-year; no submarket recorded a vacancy rate over 12.2%. Asking rents also improved. The overall weighted average asking rent finished third-quarter 2015 at $2.30/SF, up from $2.28/SF in second-quarter 2015 and $2.04/SF one year ago.
In addition to the Blizzard lease, two other large deals involving Speedo USA and Edwards Life Science locked up 100,000 feet or so of prime space, the report notes. Construction activity has been “tepid” NGKF says, but “construction activity is expected to gain steam in coming quarters, as market conditions continue to show signs of improvement.”
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David Phillips
David Phillips is a Chicago-based freelance writer and consultant with more than 20 years experience in business and community news. He also has extensive reporting experience in the food manufacturing industry for national trade publications.
