2022 Q2 OFFICE REPORT ORANGE COUNTY

Abstract

Download Report HEALTHY DEMAND RETURNS TO SOUTH COUNTY With Covid clearly a long-term issue, many mainstream tenants are still modifying hybrid workplace schedules, as the overall office market attempts to come to terms with what one headline writer called "The fuzzy math of three days a week in the office." Space everywhere is being effectively discounted with offers of free rent and hefty tenant improvement allowances. In contrast to the anemic office demand afflicting most of Orange County, the South County submarket is staging a mini recovery. Since the first half of last year, there was 829,178 SF of positive net absorption in South County, which makes up 23% of the county's 116.4-million-SF office inventory. The Irvine Company inked two major second-quarter leases -116,000 SF with Amazon and 114,000 SF with CoStar - at its 1.1-million-SF Spectrum Terrace office park in Irvine on Laguna Canyon Road. Meanwhile, in the North, Central and West County submarkets, as well as the Airport, the largest submarket, there were 1,437,307 SF of negative net absorption in the last four quarters. In the last two quarters, tenants in the North, Central and Airport submarkets shed 655,189 SF and added 42,532 SF in West County. On the strength of tenant expansion in the South County submarket alone the countywide vacancy rate - which settled at 13.4% at the end of Q2 - is 10 basis points less than a year ago. "There are few signs of imbalance in any of the major sectors of the economy;" the economists said, adding that "Labor remains strong, and personal incomes continue to improve." Download Report HEALTHY DEMAND RETURNS TO SOUTH COUNTY With Covid clearly a long-term issue, many mainstream tenants are still modifying.