Orange County Office Space Market Favoring Tenants

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Terri Chaklos of Synergy Real Estate Group speaks about the Orange County commercial real estate market.

Terri Chaklos

Terri Chaklos from Synergy Real Estate Group

"Landlords could be struggling for the next 12-24 months, maybe even longer, but on the bright side if you are a prospective Tenant in the market place, this works in your favor."

"For Orange County’s 86 million-square-foot office market, we may have finally hit the bottom of the market," stated Terri Chaklos of Synergy Real Estate Group, a part of the largest association of independent Tenant Brokers in the Nation.

The vacancy rate at the end of the first quarter settled at 19.6 percent, down from a height of 20.8 percent in the first quarter of 2010.The slight improvement in the vacancy rate was due to the increase in leasing activity from 2010 to 2011.

In 2010 there was double the amount of space leased. However, 2010 was still far below the amount of office leasing that occurred in 2005 (vacancy rate of 8.5 percent), when more than 2.8 million square feet was absorbed. In 2010 about 1.2 million square feet was leased.

Even though the Orange County office space market seems to have bottomed out, recovery will most likely take some time.

“The market is not going to turn around overnight. Landlords could be struggling for the next 12-24 months, maybe even longer, but on the bright side if you are a prospective tenant, this works in your favor,” said Chaklos. “If you are in the market for office or industrial space and comfortable with your company’s future, now is the best time to lock in long term leases and take advantage of the low rental rates and many incentives to move.”

There are certain office submarkets in Orange County that are doing well in regards to vacancy rates and some that are clearly not, among them North County, the Airport Area and South County which have some of the highest vacancy rates.

West County on the other hand has a vacancy rate around 11.6 percent, but it accounts for a small amount of the county’s office space. Either way 2011 is still an opportune time for tenants to take advantage of office leasing rates whether they are looking for space in North County, Central County, the Airport Area or any other area of Orange County / Irvine.

In regards to industrial space it looks like 2010 may have been the bottom, though Orange County is faring better than most.

All five county market areas showed gains in net absorption that were marginal or better, which bodes well for gradual improvement. Orange County’s industrial market is among the nation’s most robust, due largely to land constraints.

Even though the recession emptied some 9 million sq. ft. of space and cost 144,000 jobs, 64,000 of which were in construction and business and professional services, Orange County’s industrial vacancy is back within a couple points of its historical average.

If your business is searching for commercial space in Orange County or you are looking to renegotiate an existing lease, contact us today and we will begin working to find your next space or reduce your current rental rate.

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