Orange County Office Market Sets New Records In 2017
Orange County's office market has had a strong year, setting records for office sale volume and grabbing the top spot in the nation for office rent increases.
Office sales activity for properties with 50K SF or more hit new records based on the first three quarters of the year, according to JLL. Total sales volume reached $1.9B for those three quarters, surpassing the previous record of $1.7B set in 2015.
The average price per square foot of $286 also hit a high, exceeding the $282 record from 2008, JLL reports.
The OC's largest office transaction so far this year was Five Point Holdings' $443M purchase of the 1M SF Five Point Gateway project from Broadcom, JLL reports. That sale was for $426/SF.
Office rents over the past two years grew the most in Orange County out of all of the cities in CBRE's annual Tech-30 report. The county had 23% rent growth over the past two years, driven in large part by tech employment, which increased 40% in the OC from 2015 to 2016, according to the report.
Orange County's prospects for 2018 remain strong. The market tied with San Francisco to rank No. 2 (second to Seattle) in the Pacific region for overall positive 2018 outlook, according to the Emerging Trends in Real Estate report. The county ranks high for investor demand as well.
In terms of challenges, one of the biggest problems impacting continued growth in Orange Country, including employment and office growth, is the lack of affordable housing that affects markets throughout California.
