MARKET DRIVERS
The Orange County office market has displayed robust signs of adapting to changes since the second half of 2024. This is evident from the positive direct net absorption for the year so far, as well as the steady trends from previous quarters. The landlords are strengthening the demand for their creative office buildings by maximizing office utilization, which aligns with their ongoing market strategy.
The shift to full-time office work or the adoption of hybrid work arrangements has led to a significant decrease in some companies’ office space needs. In contrast to many other locations, the office market in Orange County has shown significantly stronger performance over the past year. Orange County’s biotech and technology industries have grown steadily, which has raised demand for shared office space.
ECONOMIC REVIEW
Mixed-use spaces still influence workplace culture, particularly employed decision making. Orange County’s stability in inflation will influence market dynamics, which are determined by the total amount of sublease space absorbed. The recent decrease in interest rates and the impact of higher yields on certain investment opportunities indicate a shift in market dynamics that may be advantageous. Orange County’s low unemployment rates indicate a strong job market, which boosts consumer spending and commercial occupancy.
In an effort to draw in new tenants and hold onto current ones, landlords are extending more flexible lease terms or considering the provision of additional amenities and services. They anticipate high demand for their upgraded premium office space,
which offers amenities that cater to a hybrid work environment.
NEAR-TERM OUTLOOK
A modest rebound is anticipated in the Orange County office market. Companies that are interested in finding flexible solutions to meet the ever-changing demands of their employees will probably continue to explore and expand the concept of flexible office space. The modernization of workplaces will be a top priority for businesses, and there will probably be a rise in investment in premium sites submarkets and other surrounding areas. The rental market in Orange County is anticipated to stabilize as the demand aligns more closely with the available inventory, particularly in desirable submarkets. In addition, there will be a focus on office buildings with better health and safety features. This will affect what tenants prefer and how people invest in real estate.
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