Now’s the Time to Seal the Deal for Office Space

Now is the time to sign a lease for office space, according to a study released Wednesday by a local accounting firm.

The report by Ernst & Young’s real estate services group in Costa Mesa predicts that the current glut of office space in Orange County will ease during the next 18 months as virtually no new construction is planned. The recession has dried up most financing for real estate development.

A turnaround will be good news for the owners of Orange County’s office buildings, which have grown accustomed to vacancy rates of just over 20% since the construction boom of the 1980s.

But demand for new space should begin to outstrip the supply, and that will mean higher rents for office tenants, said Michael Gillmore, a partner with Ernst & Young, who presented the study at a meeting of local developers and bankers.

“There’s not much being built right now,” Gillmore said. “As the market starts to turn around, there will be a bigger demand for office space, and we all know what happens then: The prices go up.”

Companies looking for a lot of space in Orange County, one or more floors, may have trouble finding it as space becomes scarcer.