ORANGE COUNTY, CA-“On its way to recovery,” “continues to plug away” and “continues to improve” are the way industry experts describe Orange County's office recovery in the second quarter. While not the dramatic improvement we're seeing in the industrial and residential sectors, the office market looks promising as it makes its slow and steady upward climb.

“I have been reading and seeing that office is slowly coming back,” Doug Praw, an attorney with law firm Goodwin Procter, tells GlobeSt.com. “Several previously vacant buildings–including one building at Jamboree and the 405 that stood vacant for years—are now fully leased.”

Cushman & Wakefield reports that the area's office market saw a 230 bps annual decline in overall vacancy to 15% in the second quarter. Tenant demand has been consistently positive for the last three years and occupancy gains totaled 1 million square feet at mid-year, with large move-ins and multiple expansions by lenders. C&W adds that leasing activity at mid-year totaled 3.8 million square feet, outpacing mid-year 2012's 3.6 million square feet leased, and spanned multiple industries.

While office leasing velocity has slowed, new construction has emerged in the second quarter. C&W reports that there are currently three class-A build-to-suit projects under construction in Newport Beach and Irvine—totaling 790,000 square feet—for PIMCO, the Irvine Co. and Google.

Jones Lang LaSalle reports that construction has begun on 520 Newport Center Dr., a 300,000-square-foot, class-A office tower in the airport submarket that is expected to be completed in second-quarter 2014. Google's build-to-suit at 19510 Jamboree Rd. broke ground during the quarter, and earlier this year the firm signed a deal to expand into approximately 70,000 square feet of space in the proposed 110,000-square-foot, class-A facility in Irvine. Also, PIMCO's new 380,000-square-foot build-to-suit headquarters at 650 Newport Center Dr. is nearing completion and is expected to be ready for the investment firm to move in by the end of the year. And lastly, Hyundai's new North American headquarters at 10550 Talbert Ave. in Fountain Valley, a 469,000-square-foot, class B office/showroom space, is slated to deliver by the end of the year.

JLL also reports that while the county added jobs at only a moderate pace during the quarter, unemployment remains lower than both the state and national averages. Over the past 12 months, the county has added 24,500 jobs, and the unemployment rate has decreased by 200 basis points to 5.5%. While financial services continue to be a strong driver in Orange County, the construction sector has suddenly become a source of growth, adding 6,400 jobs over the year. The sudden increase in office construction is a likely contributor to this trend.