A Tenants' Market Predicted Through 2015

ORANGE COUNTY, CA-Office absorption is expected to continue its slow and steady pace for at least another year as the sector gains strength, Brian Childs, EVP and branch manager of NAI Capital here, tells GlobeSt.com. Childs says he believes the county will remain a tenants' market probably through 2015.

“It seems as if the Orange County market is still gaining strength,” says Childs. “It's steady growth, not robust. There's been steady absorption for the last 10 quarters, and that should continue.”

Close to 2 million square feet is expected to be absorbed for 2013, and there's still a lot of tenant migration from older buildings to newer buildings. “There's a lot of shuffling going on as tenants are taking up the best spaces at this time,” says Childs. “They're moving to better views, and nicer spaces are being leased.”

Most of the tenant activity in Orange County is homegrown, and there's not a lot of leasing activity from outside the market. Childs says that HCP in Long Beach is the exception, since the firm is seeking two floors and may end up in Orange County. But on the whole, there's not too much movement into the county. “The county as a whole is getting stronger, and companies—whether based here or somewhere else—are getting stronger.”

Typically, he adds, you would see more absorption given this strength, “but tenants are looking at ways to reduce space costs.” Creative space, trying to increase productivity and getting better use out of their space are methods for reducing this cost.

As GlobeSt.com reported earlier this week, office leasing and trades will be largely focused on the Airport submarket and Central County next year, Blaine Annett and Colby Annett, co-managing partners of Stream Realty Partners, tell GlobeSt.com. The partners say South County has been the strongest submarket in Orange County, outperforming all of the other submarkets in the county.