COMMERCIAL REAL ESTATE : Office Construction Posts Smallest Rise in County Since ’84
The downward trend in Orange County office construction continued in 1989, according to a Coldwell Banker survey. Although the county added 2.7 million square feet of new office space last year, it was the smallest increase since 1984--a reflection of countywide vacancy rates that have exceeded 20% since mid-1986.
As in past years, the majority of construction in 1989 was concentrated in three cities: Irvine (45%), Santa Ana (18%) and Costa Mesa (9%). Aside from Irvine, four other South County cities ranked among the top 10 in adding new office space last year. The addition of 175,000 square feet of space in Laguna Niguel nearly tripled that city’s total office space and boosted its vacancy rate from less than 1% in 1988 to 66%.
Lease rates countywide rose just 2.4% last year to an average of $1.69 per square foot. At the top end, rents in San Juan Capistrano rose 23.6% to $2.04 per square foot, the highest rate in the county. On the low end, a 45% vacancy rate pushed lease rates down 11.3% in Los Alamitos to a countywide low of $1.02 per square foot.
A DECADE OF CONSTRUCTION IN ORANGE COUNTY
TOTAL NEW BUILDINGS
‘81: 51 ‘82: 67 ‘83: 22 ‘84: 22 ‘85: 45 ‘86: 55 ‘87: 42 ‘88: 30 ‘89: 40
NOTE: All survey figures exclude government-owned, medical buildings, those with just one tenant, owner-occupied buildings, and buildings or office parks with less than 30,000 square feet of rentable space.
LEASE RATES IN ORANGE COUNTY
FIVE LARGEST INCREASES
In percentage change 1988 to 1989: FOUNTAIN VALLEY: 46.3% YORBA LINDA: 31.6% SAN JUAN CAPISTRANO: 23.6% LAGUNA NIGUEL: 23.3% LA PALMA: 19.8%
FIVE LARGEST DECREASES
In percentage change 1988 to 1989: LOS ALAMITOS: -11.3% ANAHEIM: -9.7% NEWPORT BEACH: -4.9% HUNTINGTON BEACH: -4.2% LAGUNA HILLS: -3.5%
WHERE RENTS WENT UP
In dollars per square foot:
1989 1988 SAN JUAN CAPISTRANO 2.04 1.65 SEAL BEACH 2.00 1.91 LAGUNA NIGUEL 1.85 1.50 MISSION VIEJO 1.76 1.73 COSTA MESA 1.74 1.64 ORANGE 1.67 1.63 BREA 1.60 1.51 SANTA ANA 1.58 1.40 CYPRESS 1.55 1.45 BUENA PARK 1.52 1.33 PLACENTIA 1.51 1.50 WESTMINSTER 1.47 1.41 LA PALMA 1.45 1.21 FOUNTAIN VALLEY 1.39 0.95 FULLERTON 1.37 1.28 YORBA LINDA 1.25 0.95
WHERE RENTS WENT DOWN
In dollars per square foot:
1989 1988 NEWPORT BEACH 1.93 2.03 IRVINE 1.84 1.90 LAGUNA HILLS 1.64 1.70 EL TORO 1.61 1.64 HUNTINGTON BEACH 1.58 1.65 ANAHEIM 1.49 1.65 GARDEN GROVE 1.31 1.33 TUSTIN 1.37 1.40 LOS ALAMITOS 1.02 1.15
VACANCY RATES
Note: Rankings exclude cities with fewer than five buildings fitting the definition used in the survey.
LOWEST
Percent of vacant office space:
1989 1988 MISSION VIEJO 6.5 13.1 GARDEN GROVE 9.4 7.1 FULLERTON 11.8 13.4 WESTMINSTER 12.3 18.0 EL TORO 15.8 15.7
HIGHEST
1989 1988 COSTA MESA 24.2 16.7 SANTA ANA 25.0 22.3 ANAHEIM 25.0 39.5 LA PALMA 29.6 56.1 CYPRESS 31.9 21.6
