Orange County Q1 2020 Office Market Outlook
Market Overview
The Orange County office market remained stable prior to the COVID-19 shutdown, starting the decade with single-digit vacancy. Vacancy dipped 10 bps below the prior quarter, unchanged from Q1 2019 at 9.9% despite more than 1.3M SF of office space added to the market during that time. Newport Harbor Medical Plaza, a class A medical office project, came online this quarter fully leased by Keck Medicine of USC.
The average asking rent hit a new record, up 1.1% from Q4 2019 and 0.7% year over year to $2.77/SF. The South submarket saw strong rent growth, up 1.7% from Q4 2019 and 5.2% from a year ago to $3.05/SF. Completed construction contributed to rent growth in the South as four projects added 321K SF of office space since Q1 2019. By the end of the first quarter nearly 1.1M SF of office space remained under construction. Preleasing activity indicated demand for new space, however, the quarter ended with the unprecedented COVID-19 shutdown. Now the office market faces uncertainty as the pandemic develops.
Market Outlook
Trends to Watch
- Tenants reassessing space needs, including work-from-home strategies
- Landlords offering more concessions to keep tenants
- Declining lease and sales volume until some certainty is restored
Orange County Office Market
Average Asking Rent & Vacancy Rate
