Office Leasing Activity Doubles in Orange County

Office leasing activity in Orange County surged at the end of 2018. According to Savills Studley, the Orange County office market recorded 2.2 million square feet in leasing activity in the fourth quarter, nearly double the leasing activity during the previous quarter. The Orange County office market has recorded a total of 6.9 million square feet in the last four quarters. The leasing activity was driven by growth in the pharma, tech, media and marketing industries.

“While many predict a cooling of the economy, the County is still projected to add more than 28,000 new jobs this year,” Randy Parker, senior managing director at Savills Studley Orange County, tells GlobeSt.com, adding that he was not surprised the market performed so well. “Several large transactions were successfully completed in the fourth quarter including: Taco Bell, at 181,000 square feet; Glaukos, at 165,000 square feet; AltaMed, at 90,500 square feet; Google, at 44,000 square feet; and WeWork, at 64,000 square feet. Bottom line, Orange County’s labor market has gone from one of the worst to one of the best. Executives are bullish on the future, and are committing to long-term lease transactions.”

While the leasing activity was double the fourth quarter, many of these leases had been on the books. “However, the lack of large blocks of well-located, class-A space may have contributed to a rush to close these deals,” says Parker. “Co-working providers are targeting Orange County as the region gains prominence as a tech hub. The County now has over 1.2 million square feet of co-working space, which represents an increase of 20% versus the prior year.” Despite the strong leasing activity, the vacancy rate remained unchanged at 19.2%, while the class-A vacancy rate actually increased to 21.9%.