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O.C. office, industrial markets see shrinking gap in asking, bidding prices
Decrease in available space, uptick in sales will help, says Voit.
By Kristen SchottPublished: July 08, 2009 10:18 AM
Orange County's office and industrial markets are experiencing a bit of positive news: The gap between the asking and bidding prices for buyers and sellers has decreased, according to Voit Real Estate Services' second quarter market reports. The firm says the decline is indicated by a number of larger sales at the end of the second quarter.
Voit Real Estate Services’ Commercial Brokerage division directed
the sale of the 47,815-square-foot Safari Technology Park in Irvine in May.
Neither market has hit the bottom, according to Voit, but conditions such as a decrease in the amount of available space added per quarter and a small uptick in sales activity will slow the economy's toll on the sectors. Both continue to be plagued by falling rents, increased vacancies, tenant delinquencies and little financing, among other challenges.
Here's a look at the activity in both the office and industrial markets during the first part of this year:
Office market
The region added 171,863 square feet, with only 166,059 square feet of space currently under construction. The decrease in development is expected to lessen the pressure on vacancy rates in the future.
One of the larger problems in the market is a lack of tenant demand, according to Jerry Holdner, vice president of market research for Voit.
"The slow economic climate is forcing tenant contractions/consolidations and failures, which in turn has put upward pressure on vacancy and availability rates," continues Holdner. "These contractions have led many tenants to request rent relief from landlords and owners, who in turn are attempting to renegotiate loan terms with lenders.”
The average asking full service gross lease rate per month per square foot is $2.29, down 15 percent from last year's rate of $2.69, and the reason behind the decrease is most likely due to concessions made between tenants and owners and owners and landlords, says Holdner.
About 16.6 percent of direct and sublease space was vacant at the end of the quarter. The number is up slightly from last year's rate of 14 percent. The availability rate for O.C. office space is 22.5 percent.
“Orange County should see an increase in office activity in the second half of 2009 from pent-up demand, once financial markets correct themselves and consumer confidence increases," says Holdner. "The final outcome hinges on how the recession progresses and how quickly credit eases up.”
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Related headlines
'OC METRO Minute,' July 7: Gap between asking, bidding prices decreases for office, industrial markets
Sales of Orange County businesses fall 49 percent
'OC METRO Minute,' July 6: clean tech venture investments up 12 percent
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Orange County's office and industrial markets are experiencing a bit of positive news: The gap between the asking and bidding prices for buyers and sellers has decreased, according to Voit Real Estate Services' second quarter market reports. The firm says the decline is indicated by a number of larger sales at the end of the second quarter. Voit Real Estate Services’ Commercial Brokerage division directed the sale of the 47,815-square-foot Safari Technology Park in Irvine in May. Neither market has hit the bottom, according to Voit, but conditions such as a decrease in the amount of available space added per quarter and a small uptick in sales activity will slow the economy's toll on the sectors. Both continue to be plagued by falling rents, increased vacancies, tenant delinquencies and little financing, among other challenges. Here's a look at the activity in both the office and industrial markets during the first part of this year: Office market The region added 171,863 square feet, with only 166,059 square feet of space currently under construction. The decrease in development is expected to lessen the pressure on vacancy rates in the future. One of the larger problems in the market is a lack of tenant demand, according to Jerry Holdner, vice president of market research for Voit. "The slow economic climate is forcing tenant contractions/consolidations and failures, which in turn has put upward pressure on vacancy and availability rates," continues Holdner. "These contractions have led many tenants to request rent relief from landlords and owners, who in turn are attempting to renegotiate loan terms with lenders.” The average asking full service gross lease rate per month per square foot is $2.29, down 15 percent from last year's rate of $2.69, and the reason behind the decrease is most likely due to concessions made between tenants and owners and owners and landlords, says Holdner. About 16.6 percent of direct and sublease space was vacant at the end of the quarter. The number is up slightly from last year's rate of 14 percent. The availability rate for O.C. office space is 22.5 percent. “Orange County should see an increase in office activity in the second half of 2009 from pent-up demand, once financial markets correct themselves and consumer confidence increases," says Holdner. "The final outcome hinges on how the recession progresses and how quickly credit eases up.” NEXT PAGE >> Related headlines 'OC METRO Minute,' July 7: Gap between asking, bidding prices decreases for office, industrial markets Sales of Orange County businesses fall 49 percent 'OC METRO Minute,' July 6: clean tech venture investments up 12 percent |
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