New Deliveries Stagnate Vacancy Rates

Irvine, CA

The office vacancy rate remained relatively flat in the second quarter, decreasing only 30 basis points to 11.3%—according to a new report from Cushman & Wakefield. While the vacancy rate barely nudged, leasing activity and absorption was strong and rental rates continued to rise. The stagnant vacancy rate is likely due to new office product that came to market during the quarter.

“Absorption remains positive and healthy, but not overly strong. Orange County closed out the second quarter of 2018 with overall vacancy declining to 11.3%, while direct vacancy also decreased 20 bps to 10.7% quarter-over-quarter,” Eric Kenas, market director of research at Cushman & Wakefield, tells GlobeSt.com. “We had 143,000 square feet more this quarter, with the first quarter posting 130,000 square feet bringing year-to-date to 272,000 square feet. This is down from 827,000 square feet from a year ago. A lot of absorption has been offset by 786,768 square feet of new deliveries to the market.”