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Balanced Economy Reflected in Q2 Office Leases
The Orange County Q2 2018 office market reports from commercial real estate brokerage houses confirm the Orange County economy and office markets have rebounded from the Great Recession. The downturn hit the market hard a decade ago, mainly because it was largely dependent on mortgage companies in the financial services industry.
Today, diversity has arrived, and landlords are quickly adding amenities tenants demand in order to help companies attract and retain employees.
JLL reports recent leasing activity reflects the diverse economy’s wide spectrum of industries that boost the local labor pool, but also provide landlords with a strong mix of companies to attract and retain as tenants. Q2 deals included Anduril (technology), State of California (government), Covidien (medical technology), Acorns (fintech), CNI College (education), and Hoag Memorial (healthcare).
CBRE notes occupiers were drawn to amenity-rich buildings in central locations, and landlords latched onto that trend and focused on renovations and increased asking rates. The asking lease rate of $2.90-per-square-foot, per-month equaled the prior quarter, but grew by 5.5% year-over-year. Vacancy is well below the 10-year 13.2% average, and trending downward with rapid leasing among newly- completed office buildings.
Cushman & Wakefield reported the quarter ended with overall vacancy decreasing 30 bps to 11.3%. New leasing activity saw an uptick with just over two million square feet transacting in Q2 2018. The brokerage said asking rents rose significantly over the last two years, as a result of the delivery of multiple Class A developments and positive market conditions.
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