ORANGE COUNTY, CA-Call it Lucky 13. For the first time in 13quarters, Orange County’s office market posted positive netabsorption, according to a new report from Voit Real EstateServices. Not only that, the Voit report shows the first decline invacancy since 2006 and marks the second quarter in a row that atleast one of the firms tracking the county’s office market showedpositive net absorption in its quarterly survey.

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Last quarter, CBRE showed a positive net while Voit’s figuresstill showed a negative net, albeit a much smaller negative numberthan in previous quarters. This quarter, both Voit and CBRE showpositive absorption in the county’s office market, Voit 432,837square feet on an inventory of 110 million square feet and CBREshowing 519,151 on an inventory of 100 million square feet.

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Jerry Holdner, vice president of market research for Voit, tellsGlobeSt.com that the positive net absorption is one of a number ofsigns of improvement in the office sector. Combined vacancy in bothdirect and sublease space dipped to 17.79% in the third quarterfrom 18.22% in the second quarter. “This is the first time sincethe second quarter of 2006 that we’ve seen a drop in the vacancyrate,” Holdner says.

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Holdner notes that the 17.79% vacancy is significantly less thanthe 23% rate recorded in 1990. Other positive signs: “Overall,availability is decreasing and investment sales activity hasincreased,” Holdner says.

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Kurt Strasmann, managing director of Voit’s Orange Countybrokerage offices, points to another positive sign. “We are finallybeginning to see a decrease new available space being added to themarket,” Strasmann sys. Available space on both a direct andsublease basis was 21.87% for the third quarter, down from 18.22%in the second quarter.

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Despite these positive signs, the Orange County office marketcontinues to decline in other respects. Both Voit and CBRE showrents continuing to slide, with both pegging the countywide averageasking lease rate at $2 per square foot per month, full servicegross, and both saying that the rate declined six cents from lastquarter.

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Holdner’s outlook is that lease rates will remain soft for thenear future, and concessions in the forms of free rent, reducedparking fees, relocation funds and tenant improvement allowancesshould continue to increase to encourage tenants to actimmediately. Like everyone tracking the office market, he cites theimportance of new jobs as essential to any sustained recovery inthe office sector. CBRE managing director Jeff Osborn made the samepoint last quarter when the company’s quarterly survey showed thefirst positive net absorption in the Orange County office market in11 quarters. “The critical issue to us right now is job growth, andwhether it will be sustainable," Osborn said.

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