COMMERCIAL REAL ESTATE : Weak Demand for New Office Space Expected to Improve

Sinking demand for new office space in Orange County appears to have bottomed out, reports Robert Dunham, president of Newport Economics Group.

But demand for new office space for all of 1992 is expected to total less than 1 million square feet, which would be the third annual decline in a row from a peak of 4 million square feet in 1989.

That makes the situation worse than in the 1974-75 and 1981-82 recessions, Dunham said.

The county’s shrinking work force has been a major factor in the decline, he said. By February of this year, employment was down by 81,000 jobs from a peak of 1.2 million in 1990. In previous recessions, employment dropped by only 15,000.

There is reason for optimism, though, said Dunham, whose company, based in Newport Beach, specializes in market research and economic reports for the commercial real estate industry. Since February, he said, employment has been picking up. If the trend continues, demand for office space is expected to rise to between 1.7 million and 2 million square feet in 1993, 2.5 million square feet in 1994 and 3 million square feet in 1995 and beyond.