Which Factors Could Shift OC Office Rent Growth?

Dienstag: “The Central, North and West County submarkets have more room for additional growth since their rent recovery is slower than the other submarkets.”

IRVINE, CA—If job growth stops in Orange County, then demand decreases, which can slow office rent growth. Also, M&A activity that results in layoffs reduces office-space demand, JLL senior research analyst Jared Dienstag tells GlobeSt.com. According to a recent report from the firm comparing office rent growth in various Orange County submarkets since 2010, in addition to leading Orange County’s rent growth, strong job growth from startups and mature companies is a key factor in driving the demand for office space in the market.

The report also showed that the Airport Area surpassed 2007’s peak average asking monthly rental rate ($3.02 per square foot, full service gross) in Q4 2016 with a rent of $3.06 per square foot. Although West County recorded the lowest rent growth since 2010, the submarket is not as susceptible to cyclical fluctuations as most other submarkets. The current average rent for the total Orange County market of $2.68 per square foot is only 2.2% off the 2007 peak rent of $2.74 per square foot.