OC office market propped up by small tenants

Deals under 10K sf made up more than 60% of Q1 leases: JLL report

Los Angeles /
Apr.April 12, 2022 08:30 AM
(iStock/Illustration by Kevin Rebong for The Real Deal)
(iStock/Illustration by Kevin Rebong for The Real Deal)

Office leasing in Orange County has picked up — mostly thanks to smaller deals.

About 60 percent of office leases signed in Orange County in the first quarter were for less than 10,000 square feet, according to a report from JLL. The number of leases signed was up 10 percent compared to the first quarter of 2021, though net absorption dropped slightly at 0.1 percent, suggesting companies were taking up less space on average.

“Many employers [showed] a preference for small office footprints” in the first quarter, the report said. The report also shows a lack of sizable tenants in the mix for the quarter, a trend evident in the number of larger companies exiting office campuses. Last year, Bank of America said it would exit a 30-acre office campus in Brea this summer.

The largest direct deal in the first quarter was for 53,980 square feet, according to Newmark. CAP Diagnostics, a medical testing company, leased the space at Irvine Company’s Sand Canyon Business Center in Irvine.

Around 16 percent of Orange County’s office market is currently vacant, according to the report. The statistic is higher for Class A office properties — almost 21 percent of this space is vacant.

Orange County’s numbers are better than Los Angeles, where nearly a quarter of all office space is available. And rents are rising in Orange County, too.

Monthly asking rents averaged $2.81 per square foot across Orange County in the first quarter — a 1.5 percent increase compared to the last quarter of 2021, after two straight quarters of declines.

But landlords in Orange County have increased concessions, JLL said, as a way to entice new tenants and “get deals across the finish line.” In the first quarter, the county saw a 25 percent increase in tenant improvement allowances.

Orange County is set to get more than 1.2 million square feet of new Class A office space over the next few years, even as some existing properties are bought up for conversion into logistics facilities. In the first quarter, 15 office properties were up for conversion into other property types.

Last month, Prologis determined this trend would likely be “minimal,” given city regulatory, zoning and cost issues associated with such redevelopment.





    Related Articles

    arrow_forward_ios
    TCW's David Lippman with and the City National Plaza at 515 S. Flower Street (David Lippman, City National Plaza)
    TCW inks largest pandemic-era office lease in DTLA
    TCW inks largest pandemic-era office lease in DTLA
    eBay's Jamie Iannone with 455 North Fairfax Avenue (eBay, Google Maps)
    eBay goes brick and mortar on popup for sneakerheads
    eBay goes brick and mortar on popup for sneakerheads
    Jeff Blau with 1755 Argyle St (LinkedIn, Commercial Observer)
    Related Companies to sell Argyle House in Hollywood
    Related Companies to sell Argyle House in Hollywood
    Frank Gehry and the Ocean Avenue Project (Getty, Ocean Avenue Project, iStock)
    Frank Gehry’s long-awaited Santa Monica project takes big step forward
    Frank Gehry’s long-awaited Santa Monica project takes big step forward
    Duke Realty's James Connor and 14724 Proctor Avenue in City of Industry (Google Maps, Duke Realty)
    Duke Realty gets another 230K sf in City of Industry
    Duke Realty gets another 230K sf in City of Industry
    Westmont's Andy Plant and Westmont Village Westmont Living, iStock)
    Senior community nixes industrial development for more residential
    Senior community nixes industrial development for more residential
    FivePoint Holdings' Dan Hedigan (Fivepoints, Ranch on the River)
    FivePoint slashes workforce 29%, posts $37M loss
    FivePoint slashes workforce 29%, posts $37M loss
    Cedars-Sinai's Thomas Priselac and 3400 Lomita Boulevard (Cedars-Sinai, LoopNet)
    Cedars-Sinai pays $70M for Torrance medical offices
    Cedars-Sinai pays $70M for Torrance medical offices
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...