Orange County Office Market Report

Transcription

1 FIRST QUARTER 2015 Orange County Office Market Report Partnership. Performance. Avison Young - Irvine 2030 Main Street, Suite 150 Irvine, CA

2 FIRST QUARTER 2015 Orange County Office Market Report Partnership. Performance. Market Snapshot Asking Rent Market Overview Competition Escalates For Orange County Office Space Orange County continues to see increasing demand for a tightening office supply, while prices are pushed up. This thriving hub for financial services, information technology, logistics and health care, has continued to attract a talented workforce. The region s ideal geography and bustling tourism trade contribute to a high quality of life. Orange County boasts one of the lowest unemployment rates in the state at 4.6% as of the end of the first quarter for Economic growth and impressive employment rates, combined with high occupancy and subsequent elevating rents, are fueling leasing activity. Vacancy Rates Demand is still on the rise for flexible and mixed-use designs that cater to the needs of the evolving modern office worker. Increased demand for medical office space is another dynamic component of the county s leasing activity. Demand for increasingly specific needs in office space will insure a healthy cycle of movement within the real estate market. The first quarter of 2015 closed with a 10.0% vacancy rate, down from 11.9% in the same quarter of the previous year, trending down consistently, year-over-year, since the start of Rental rates jumped to $2.12 gross, surpassing the $1.97 gross seen in the first quarter of This makes a tenth quarter of rental increases for the county, and it is a course that is expected to continue through Current rents are still well below the highs of $2.75 gross that were seen in 2007, indicating that there is a considerable amount of bandwidth that the market is capable of growing to. Total net absorption stayed positive at 140,164 sf by the end of the first quarter. Net Absorption As of the first quarter of 2015, there was one office building delivered, totaling 21,311 sf. The first new office building of the year features LEED Gold shell and core construction. At this time, there are three new investment grade office properties currently under construction, amounting to a total of 542,595 sf of new inventory that will soon be added to the market. The largest of which is located in Irvine, with 425,044 sf, featuring LEED Gold certification design standards, and has no tenant precommitments. The remaining buildings will be completed within a year, and each still have available space on the market won t see the same volume of construction delivery as the previous year, with 1,442,761 sf added in However, developers are still moving forward, albeit cautiously since the recession. There is currently over 5.4 million sf of proposed office space poised on the side-lines and actively being marketed. *The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.

3 MAJOR LEASE TRANSACTIONS MAJOR SALE TRANSACTIONS UNDER CONSTRUCTION The Leadership in Energy & Environmental Design program recognizes exceptional green building construction and operation. There are over 1,200 buildings in the Orange County at varying stages in LEED Certification achievment. Of the 5.4 msf of proposed office space reported in Orange County, 67% of the volume is located in Irvine and 27% of the volume is split between Tustin and Santa Ana. The fastest growing occupations in Orange County are forecast to be in Fashion, Health Care Services, Construction, Loan Officers, Information Technology and Marketing. The population in Orange County is experiencing a faster growth rate than that of the state as a whole, expanding 3.5% over the past three years. There are approximately 3,114,363 people living in Orange County as of * The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.

4 Orange County Regions By The Numbers *The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.

5 * The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.

6 Geographic Coverage 91 Airport Area Costa Mesa Irvine Newport Beach North County Anaheim Hills Brea Buena Park Fullerton La Habra La Palma Placentia Yorba Linda South County Aliso Viejo Dana Point Foothill RAnch Irvine Spectrum Laguna Beach Laguna Hills Laguna Niguel Lake Forest Mission Viejo Rancho Santa Margarita San Clemente San Juan Capistrano West County Cypress Fountain Valley Garden Grove Huntington Beach Los Alamitos Seal Beach Stanton Westminster Central County Anaheim Orange Santa Ana Tustin Unemployment Rates Orange County: Improving Feb % Feb % California: Improving Feb % Feb % United States: Improving Feb % Feb %

7 Avison Young at a Glance Avison Young, a real estate company committed to you. We deliver results that are aligned with your strategic business objectives, support real estate initiatives that add value, and build competitive advantage for your organization. A Growing, Multinational Presence Avison Young is the real estate partner businesses trust for intelligent, integrated solutions. Avison Young is Canada s largest independently owned commercial real estate services company. Founded in 1978 as Graeme Young & Associates of Edmonton; Merged with and Avison & Associates in 1996 to form Avison Young. In 2009, Avison Young began international expansion and has since opened 45 U.S. and 5 European offices. In , Avison Young won designation as one of Canada s Best Managed Companies, Canada s most prestigious corporate award. In 2015, Avison Young was named a Canada s Best Managed Companies Gold Standard winner (2014). Avison Young is the world s fastest-growing commercial real estate services firm. Headquartered in Toronto, Ontario, Avison Young is a collaborative, global firm owned and operated by its principals. Founded in 1978, the company comprises 1,700 real estate professionals in 66 offices, providing valueadded, clientcentric investment sales, leasing, advisory, management, financing and mortgage placement services to owners and occupiers of office, retail, industrial and multi-family properties. Contact Information - Southern California, United States Los Angeles - Downtown Los Angeles - West Los Angeles - North 555 S Flower St, Ste Wilshire Blvd, Ste Forest Lawn Dr Los Angeles, CA Los Angeles, CA Los Angeles, CA Primary Contact: Ted Simpson Primary Contact: Neil Resnick Primary Contact: Mark Evanoff ted.simpson@avisonyoung.com neil.resnick@avisonyoung.com mark.evanoff@avisonyoung.com Los Angeles - Santa Monica 301 Arizona Ave, Ste 303 Santa Monica, CA Primary Contact: Randy Starr randy.starr@avisonyoung.com Orange County - Irvine 2030 Main Street, Ste 150 Irvine, CA Primary Contact: Dan Vittone dan.vittone@avisonyoung.com San Diego - La Jolla 4225 Executive Sqr, Ste 600 La Jolla, CA Primary Contact: Jerry Keeney jerry.keeney@avisonyoung.com Regional Managing Director: Chris Cooper - Corporate 555 S Flower St, Ste 3200 Los Angeles, CA chris.cooper@avisonyoung.com Report Prepared By: Amber Jagers - Research Manager 4225 Executive Sqr, Ste 600 La Jolla, CA amber.jagers@avisonyoung.com , Avison Young (Canada) Inc. The statistics contained in this report were obtained from sources deemed reliable, including Avison Young, Bureau of Labor Statistics, CoStar Group Inc., Real Capital Analytics, Inc., Reis Services, LLC, State of CA Employment Development Department, U.S. Green Building Council. However, Avison Young (Canada) Inc. does not guarantee the accuracy or completeness of the information presented, nor does it assume any responsibility or liability for any errors or omissions. All opinions expressed and data provided herein are subject to change without notice. This report cannot be reproduced in part or in full in any format without the prior written consent of Avison Young (Canada) Inc.