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Orange County office property sales decline
Research - MAY 17, 2018

Orange County office property sales decline

by Andrea Zander

Office property sales during the last six months (through February 2018) totaled $1.1 billion in Orange County, Calif., a 25.7 percent decline compared to the previous six–month total of $1.5 billion, according to Savills.

Overall quarterly leasing activity decreased from 2.2 million square feet to 1.4 million square feet, falling well short of the long-term quarterly average of 2.1 million square feet. Tenants have leased 7.8 million square feet in the four most recent quarters.

Although the market saw a decline in leases, more than 100,000 square feet, leasing activity remained steady through the first quarter. Healthcare, financial services and a diverse mix of other sectors accounted for the top deals in the quarter.

As companies in Orange County try to attract and retain talent, modern amenity-rich space has become essential in creating an atmosphere that both increases productivity and caters to top tenants, according to Savills Tenants are implementing workplace strategy, balancing multiple goals of space efficiency and a setting that aligns space use to a company’s culture. For this reason some firms, particularly those in the technology and marketing industries, have left behind older class B product that is becoming more functionally obsolete. This dynamic is further seen in the multitude of creative office conversions and renovations to existing product across the market.

The overall availability rate spiked by 110 basis points during the first quarter, jumping to 19.9 percent. Availability has increased in multiple submarkets. A recent flurry of space added in the Airport Area pushed its availability rate to 23.7 percent.

 

To read the full report, click here.

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