Office, Industrial Market Static in Quarter : Real estate: The county office vacancy rate was 18.79%. Analysts say little change is likely this year.
Orange County’s office and industrial real estate market changed little during the first quarter, and analysts said Monday that no significant shift is likely until early next year.
The vacancy rate for office buildings was 18.79% for the first three months of 1993. That compared with 22% for the same quarter a year earlier, according to a study by CB Commercial Real Estate Group in Laguna Hills. The average rent, meanwhile, fell to $1.48 a square foot, contrasted with $1.53 a square foot for the same period last year.
The industrial vacancy rate was 13.6%, compared with about 13% for the first quarter of 1992.
“We keep getting mixed signals,” said John A. Ollen, senior vice president and manager in the brokerage’s South County office. “It’s a very quirky recovery, where (Gross Domestic Product) is up but companies are downsizing. That has an impact on the commercial real estate market.”
CB Commercial’s study included 520 office buildings of 30,000 square feet or more, and of 5,885 industrial properties 10,000 square feet or larger. Because the quarter doesn’t end until Wednesday, part of the data was based on projections of market activity.
With reduced leasing rates, many tenants have been able to move to top-of-the-line space, fueling an increase in brokers’ activity. But such moves do little to change the amount of space that is vacant.
The market is “all over the board,” said Thomas A. Fillmore, research director for Grubb & Ellis Commercial Real Estate Services in Newport Beach. “The trend has been that there is no trend. There are a lot of loose ends out there that have to be tied up.”
Grubb & Ellis is scheduled to release its first-quarter report in mid-April.
The CB Commercial figures also showed little change from the final quarter of 1992, when the office vacancy rate was 20.18% and the average rent $1.51 a square foot.
“We’re kind of bumping up at the bottom of the cycle,” said Walter Hahn, director of real estate consulting for the accounting firm Kenneth Leventhal & Co. in Newport Beach. “The reduction in the vacancy rate will be slow until employment grows.”
Indeed, CB Commercial brokers reported brisk activity, including several small businesses moving some operations from Los Angeles County to Orange County. But companies are still trimming staffs, cutting the need for space. Orange County’s unemployment rate for February was 6.5%, up from 6.4% in January.
Business rents probably will not rise until the vacancy rate reaches or falls below 10%, Hahn said. The office market may not see that until 1997, he said, and the industrial market until 1995.