Orange County Real Estate Market Reports

Orange County Office Market

Vacancy dropped to 17.9% this quarter but remains elevated by historical standards. Total vacancy is 200 bps above the five-year average. Net absorption is positive for the fifth quarter in a row, totaling 54,269 SF in net gains. The largest move-in of the quarter was by St. John Knits International Inc. occupying its new 84,493-SF headquarters in Anaheim. Muted office demand is prompting developers to scrap planned office projects, leaving the construction pipeline empty for the first time since the Global Financial Crisis in 2008. Some underperforming office properties will find new life as multifamily, industrial or medical developments. This, along with owner-user sales, will exert downward pressure on the region’s office inventory, vacancy and availability.

Orange County Industrial Market

Current leasing activity is slow relative to 2021-2022. Net absorption losses persisted for the seventh-straight quarter, with -178,536 SF. Vacancy (4.1%) is the highest it has been in over nine years but remains well below the peak of 6.8% from the Financial Crisis in 2008 and one of the lowest across the Southwest region. Under-construction activity dropped to 1.9 MSF after three projects totaling 411,711 SF delivered. Two of the three projects are fully leased, which brought pre-leasing levels down to 4.8% of overall construction. Office-to-industrial covered land plays are still ongoing. This quarter, the city of Santa Ana approved plans for C.J. Segerstrom & Sons to convert a dated office complex into a Class A industrial park that spans across 313,000 SF.