Increase in Tenants Fails to Bring Down Vacancy Rates

Tenants took a record 1.04 million square feet of office space off the Orange County market during the third quarter, commercial broker Coldwell Banker reported Friday.

But the county’s office vacancy rate actually rose during the quarter because many new buildings opened, the brokerage said.

The vacancy rate was 21% during the third quarter, up from 20.3% in the second quarter.

More than 2 million square feet of new office space came on the market during the quarter. A big chunk was taken by several big tenants, but not enough to bring the vacancy rate down.

But at least the oversupply of office space isn’t growing as fast as it was. With just 2.7 million square feet of office space under construction in the county and construction slowing “drastically,” the brokerage said, “this quarter should be the last to see such a sudden infusion of space.”

Rents generally continued flat during the quarter, it said.

Lease rates in the market for industrial buildings are also flat, even though the third quarter actually showed a slight improvement in leasing activity over a very slow second quarter, the brokerage said.

Most of the leasing was done in the central and southern parts of the county.