Tenants Can Cut Deals in Negotiating Office Leases
Thanks to an expected 25% vacancy rate by the end of the year, along with 7 million square feet of office space available, Orange County has become a tenant’s market, according to William Burke, president of McCarter-Burke, a commercial and industrial brokerage firm.
Citing statistics prepared by the Research Network, Irvine, Burke said that the current oversupply of office space means “great opportunities--and fabulous deals--for businesses contemplating a move to or within Orange County.”
“It’s not uncommon to see a $500,000 lease that includes $200,000 in tenant improvements and possibly several months’ free rent,” he said. “Owners are working with tenants because they have made long-term commitments to the new office buildings that are opening or nearing completion.”
Matthew Disston of Research Network traces the current oversupply of office space to the 1978-81 period “when interest rates had peaked and the rezoning of the Irvine Industrial Complex to the Irvine Business Complex was completed.”
The rezoning allowed higher densities that made office buildings, especially high-rise ones, viable, he said, adding that the county had an office vacancy rate of only 4.5% by the end of 1978.
Disston expects the oversupply of office space to continue for the foreseeable future because “there is about 35 million square feet of office space in Orange County; 7 million square feet is available, there is another 6 to 7 million square feet under construction and another 10 to 15 million square feet in planning stages.”