MARKET DRIVERS
DESPITE A SLOW TURN, Orange County’s economy is still vibrant early in the first quarter of 2023. The total number of office spaces in Orange County is still about the same as in the previous quarter, enabling some regions to offer rent discounts to successful tenants. Compared to Los Angeles and San Diego’s average market rates, rents here are about 20% less costly.
ORANGE COUNTY’S AVERAGE ASKING RENT is $2.67/SF FSG, compared with the national average of $2.92/SF FSG. The county’s vacancy rate, at 12.6%, is still substantial, and the vacant shadow area might make it more difficult. The ongoing embrace of hybrid work arrangements may affect the demand for collaborative office spaces in Orange County instead of traditional cubicles and private offices.
THE STRENGTH OF ORANGE COUNTY is its location just south of Los Angeles, a significant commercial and cultural hub. Orange County is a sought-after location for businesses that want to be near the city’s resources and talent pool due to its proximity to Los Angeles.
ECONOMIC REVIEW
ORANGE COUNTY is a significant economic hub in Southern California, with a diverse economy that includes a strong manufacturing sector, a thriving tourism industry, and a growing technology sector. The county’s economy is expected to grow at a rate of 2.5% in 2023, which will create jobs and demand for office space.
NEAR-TERM OUTLOOK
TRADITIONALLY, Orange County has been a strong market for office real estate, supported by an extensive mix of industries and a solid local economy. Businesses are looking for flexible office space that can be used for various purposes, such as co-working space and shared office space. As a result, demand for office assets in Orange County may remain strong in the near term, particularly for high-quality properties in desirable locations.
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