Orange County Office Market Steady, Sublet Space Grows
Leasing increased in the Orange County office market during the third quarter even as availability decreased and rents rose. Demand remains steady, according to Savills Studley's Q3 Orange County Office Sector report.
Office leasing activity totaled 2.5M SF in Q3, ahead of the long-term historical average of 2.1M SF/quarter. Still, leasing is running about 10% behind the average for the past four quarters, which totaled 8M SF, the report notes.
Overall availability is 17% and the average asking rent is $30.57, up 0.4%. The increase in rent was driven mostly by a 0.9% increase in Class-A rent to $34.31.
Sales for the first three quarters of 2017 reached $1.1B in Orange County, down 8% from $1.2B during the same time period in 2016.
The county's office market remains strong, though there has been a spike in sublet space from 420K SF a year ago to 793K SF in mid-September. The increase was driven in large part by Broadcom's move out of University Research Park.
Even with sublet space nearly doubling from a year ago, the office market remains tight, particularly for larger tenants that need more space.