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ANAHEIM, CA-The Orange County office market continued its march toward records in vacancy, absorption and asking rental rates during the third quarter, with vacancy sliding to its lowest level since Voit Commercial Brokerage began tracking it in the 1980s. At the same time, rental rates continued their upward march to match the previous high that was set in 2001.Voit VP Jerry Holdner, chief of research for the firm, tells GlobeSt.com that the vacancy rate dipped to 7.34% and the average asking rental rate for OC office space climbed to $2.26 per sf, full service gross. Along with the dip in direct vacancy, the total amount of office space available in Orange County, including both direct and sublease space, dropped to 10.17% in the third from 13.72% in the third quarter of 2004.The decrease in total available space amounts to a 25.87% drop in supply, combined with a 30% drop in the direct vacancy rate, which was 10.5% at this time last year. Holdner says that the drop in supply explains the increase in construction activity and the rise in average asking lease rates. Total space under construction in the third quarter was 1.75 million sf, almost four times the amount that was under construction in the third quarter of last year.The last time average asking lease rates hit $2.26 was in the first quarter of 2001. Rents have been rising for seven consecutive quarters in the county, with this latest rate representing an increase of 10.24% from last year’s third quarter rate of $2.05. Holdner, who forecast in January that the county’s office market would match its previous vacancy and rent records some time this year, believes the Orange County office market is poised to set new average asking lease rates records in fourth quarter of this year.The office market is also posting what Holdner calls “amazing” absorption, with more than 10 million sf absorbed in the past three years and one month. Based on figures for the past 13 quarters, the county has absorbed an average of 776,923 sf of office space every quarter.

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