The New York Stock Exchange this week suspended trading of New Century's stock, some lenders have cut off funding for the company and others may follow suit, and New Century has stopped accepting new loan applications. In a public filing Tuesday, New Century said that if the company and its subsidiaries are not able to satisfy their obligations under its lending agreements, "one or more of the company's lenders may seek to liquidate" its mortgage loans or other assets.

New Century's 267,000 sf is in Maguire's Park Place project in Irvine, where the lender's lease runs for approximately three years in two buildings. New Century is also a tenant under a third lease for approximately 190,000 sf at Maguire's newest development, 3161 Michelson Dr., but that lease has not yet started.

Rob Maguire, chairman and CEO of the REIT, says that Maguire is achieving rents that are 25% to 50% higher than the New Century rents with other tenants, adding that the Orange County office market "continues to be strong with approximately 7% direct vacancy in the Greater Airport Area." Maguire said in a statement that, "Should New Century not take occupancy at our new 3161 Michelson property, we believe an opportunity exists to lease all of their space, which includes the top four floors of the 20-story office tower, at significantly higher rates than are payable by New Century."

According to Cushman & Wakefield, the subprime mortgage industry in Orange County occupies approximately five million sf of the county's overall office inventory of approximately 130 million sf. Demand for office space is expanding in other sectors, including biotechnology, healthcare, technology, gaming and professional service firms, Cushman & Wakefield says.

Office brokers and researchers have had their eye on the mortgage industry for some time because of the potential impact of a contraction in the industry, but a 2006 year-end market report by Voit Commercial Brokerage pointed out that the county's office market "was still able to grow" despite the contraction of the mortgage firms last year. The Voit report showed that the shrinking mortgage industry did affect the office market, however. with the availability rate for office space rising to 11.5% in the fourth quarter, an increase that Voit attributed to the large amount of space that mortgage companies and mortgage-related businesses returned to the market as sublease space in 2006.