FOOTHILL RANCH, CA—There are “lots of green lights” for lending in the Orange County office arena, and lenders are beginning to loosen their underwriting standards, Kevin Shannon, who leads CBRE's West Coast institutional group for the office sector, tells GlobeSt.com exclusively. We spoke with Shannon following the announcement of his firm brokering the sale of Campus South County, a class-A, 288,348-square-foot, three-building office campus located at 27042, 27051 and 27121 Towne Centre Dr. here, to get his take on the deal and trends he's noticing in office investment in Orange County. 

GlobeSt.com: What stands out for you with the Campus South County sale?

Shannon: We had a lot of buyer activity for it. A lot of capital has identified Orange County as a great place to buy real estate. A lot of capital thinks that some of some of the other coastal markets like Seattle, San Francisco, the Silicon Valley and West L.A. have gotten too pricy—some assets are at or above replacement cost in these markets. Orange County still has momentum on the leasing side, but is at a discount to peak sales prices and rents, so it's really attractive to capital. Orange County has gotten really popular, and it's the number-one investment market for some capital.

GlobeSt.com: Do you expect to see more transactions of this kind in Southern Orange County this year?

Shannon: I think you're going to see more of them. I think a lot of owners think rents are going to spike, so there will be more transactions, but there's not an overwhelming supply. A lot of owners are waiting for peak values before selling, so there's not going to be a lot of product. If you look at Orange County, the vacancy rate for class-A in the Airport submarket is about the same as it was for class-A in 2007. Orange County is a market that's still below peak asset pricing, but a lot of coastal markets are exceeding 2007 pricing, which makes Orange County especially attractive.

GlobeSt.com: What trends do you see in Orange County office investment?

Shannon: There's a lot more optimism in the underwriting, and lenders are bullish about the future. Foreign capital is still a huge component in the investment market, and there's more foreign capital in the coastal markets as investment-market trends continue to be favorable. There's pretty much a lot of green lights, really no yellow or red in the capital markets right now.

GlobeSt.com: What types of office properties are investors seeking in this market?

Shannon: They're seeking core class-A properties that are stabilized as well as value-add. Those are the favorite types of investment properties right now.