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OFFICE MARKET CONTINUES TO STRUGGLE AT YEAR END
The Orange County office market continued to weaken with
-653,400 SF of net absorption in Q4. This negative absorption caused an increase of 90 basis points in the total vacancy rate from 20.6% in Q3 to 21.5% in Q4. Direct weighted average asking lease rates dropped for the eighth consecutive
quarter to $2.21 per square foot, per month Full Service Gross (FSG), a decline of $0.10 PSF from Q3. The lack of leasing activity and continued negative net absorption displays that many tenants are not in financial situations to renew their leases in their current space, let alone expand
to larger spaces.
During Q4, several trophy buildings were sold, which include 2050 Main Street in Irvine, 3501 Jamboree Road in Newport Beach, and 3 MacArthur Place in Santa Ana. The infusion of new landlords that purchased office buildings at lower costs and without the heavy debt the previous owners had to work with, will allow the new landlords to be more aggressive with their lease negotiations. Although these transactions are steps in the right direction for the market to settle and many of the drastic hits to the market have already occurred, it is expected that 2010 will be another difficult year for the Orange County office market.
Contact Jared Dienstag at 949.724.5515 for more information.
  OFFOC09Q4.pdf
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