Despite the Ford move and lots of...
Despite the Ford move and lots of other tenants looking for space, office vacancy rates rose in Orange County during the first three months of the year as more new office towers were opened.
In the John Wayne Airport area, 26.4% of the space in larger office buildings was vacant, reported broker Cushman & Wakefield of California. That was up from 24.6% in the last quarter of 1987.
In suburban office locations in the southern part of the county--outside the central business district around the airport--vacancies were lower but still edged up during the quarter. About 22.9% of the space was vacant during the quarter, up from 20.9% last year, Cushman & Wakefield said.
In the northern half of the county--which includes Anaheim, Orange and parts of Tustin and Santa Ana--the suburban offices were harder hit. Suburban vacancies were 33.2% during the first quarter, while offices in the downtowns of those cities averaged only a 26.4% vacancy rate.
The brokerage was surveying those areas for the first time, so no past figures are available for comparison.
The problem with the vacancy rates--which are much higher than the national averages--is not so much a lack of tenants as it is the large amount of office construction still going on in the county, says Cushman & Wakefield and the other big brokerages, which do similar surveys.
About 1 million square feet of office space came on the market during the first quarter in the airport area, according to Cushman & Wakefield’s count. Demand for office space remains strong in the county because of its healthy economy, the brokers say.
First-quarter vacancy rates rose from 13.8% to 15.1% in the nation’s downtowns, the brokerage said, citing the uncertainty over the economy and the stock market for the anemic demand by office users. Suburban office markets improved slightly, dropping from 22.2% to 21.9%.
There is still a lot of construction of offices going on in the nation’s suburbs, the brokerage said, but that is expected to decline later in the year. The vacancy rate is expected to decline with it.