MARKET DRIVERS
AFTER NEGATIVE REPORTING in 1Q 2022, direct net absorption gained a positive reporting at 277,279 SF.
LEASING ACTIVITY continued its momentum, with nearly 1.2M SF being leased in the second quarter as landlords remain aggressive with pricing and offer more concessions to capture tenants.
DIRECT ASKING LEASE RATES concluded the quarter at $2.72/SF on a full-service basis. On average, asking rates for Class A sublet space are $0.40-$0.50/SF lower than direct space.
BOURESTON DEVELOPMENT has completed the sale of Woodbridge Square, an Irvine multi-tenant medical office building. Anchor Health Properties paid $27.6M for the property. The 36,104-square-foot building at 4980 Barranca Parkway was 94% leased at the time of sale to 18 medical, dental, and laboratory tenants.
THE SPECTRUM TERRACE office campus is scheduled to be completed in the market during 3Q 2022 with over 345.8K SF as part of the total 1.2M SF currently under construction.
ECONOMIC REVIEW
ORANGE COUNTY’S LABOR MARKET fulfilled an addition 22,800 jobs between January and April 2022.
COUNTYWIDE UNEMPLOYMENT decreased to 2.7% as of April 2022. This is subsequently less than 3.1% from the prior month and below the state average of 4.6%.
NEAR-TERM OUTLOOK
DESPITE LINGERING UNCERTAINTY about the future of offices post-pandemic, Orange County’s office market was active for big-dollar sales in 2021, with a half-dozen deals exceeding $100M. In total, sales volume here last year was the highest since 2017. This is one reason why the office market is on the mend, with Orange County’s base of office space at around 143.8M SF. With 1.2M SF currently under construction, representing nearly 1% of OC’s base of office space, office occupancy continues to improve.
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