OC Office Market Loses a Little Steam
Orange County office leasing decreased the past several quarters and net absorption was down--but not negative--in Q3, with average asking rents remaining stable and actually increasing in certain areas, Transwestern managing SVP Liz Hurley tells us. According to Transwestern's Q3 OC office report, total net absorption for the third quarter was just over 100k SF, the lowest amount since Q1 '12. There are signs of downsizing in the mortgage industry, which, coupled with major move-outs, will contribute to continued decline in net absorption during Q4.
"In the third quarter, Class-A product experienced an increase in asking rents due to the continued flight to quality, which we anticipate should continue through the end of the year," Liz says. (Everybody likes nice things.) Even so, overall market fundamentals will probably improve over the next few years, as the underlying economy improves, especially through employment growth. Also, the decreasing number of distressed transactions point to an improving sales market. With money cheap, growing companies are looking hard at buying rather than renting, such as the recent purchase of 1761 E Garry Ave in Santa Ana (pictured) by Partner Engineering and Science. CBRE SVP Michael Kenndall repped the buyer in the deal.
