The fourth quarter of 2015 concluded with decreased vacancy rates and positive net absorption in both Los Angeles and Orange Counties. The average office building vacancy rate in Los Angeles County at the end of the fourth quarter decreased to 11.0% (Class A is 14.0%), down 0.5% from the end of 2014. In Orange County, the office building vacancy decreased to 9.7% (Class A is 12.3%), down 0.7% from this time last year.
Asking Rental Rates continue to rise in both Los Angeles and Orange County. The average quoted asking rental rate for available Class A office space in Los Angeles County was $2.86 per square foot in the fourth quarter, an $0.02 increase from the third quarter 2015. Orange County Class A office space quoted asking rental rates are $2.52 per square foot, $0.06 more than the third quarter 2015.
Los Angeles County’s net absorption in 2015 ended with very positive net absorption of over 2,600,000 square feet. Orange County’s net absorption in 2015 stayed positive each quarter totaling over 1,250,000 square feet. In Los Angeles County, Bank of America Home loans and AT&T moved out of a collective 367,153 square feet while Riot Games Inc., Universal Music Group and City of Los Angeles Recreation & Parks moved into a total of 421,227 square feet across Los Angeles County. Orange County tenants, St. Joseph Heritage Medical Group, Hyundai Capital America and Ingram Micro Inc. moved into 550,698 square feet.
Los Angeles County had 52 buildings delivered in 2015, totaling over 2 million square feet. In the fourth quarter alone, 14 buildings, totaling 775,496 square feet, were delivered in Los Angeles County. Delivery of new office space in Orange County was low in 2015, totaling only 6 buildings for barely 100,000 square feet. No new space was delivered to Orange County in the fourth quarter, but deliveries in Orange County are forecasted to spike in 2016.
Under construction office space in the end of the fourth quarter 2015 totaled 3,819,925 square feet in Los Angeles County and 1,891,152 square feet in Orange County. In Los Angeles County, the Los Angeles Federal Courthouse and the Office Plaza at Wilshire Grand are among the largest projects underway. In Orange County, the largest projects underway are 200 Spectrum Center and the Broadcom Corporate Campus Phase 1.
Office building sales figures rose in the third quarter 2015, tallying 85 office transactions in Orange County and Los Angeles; a combined value of sales of $2.15 billion. Cap rates have been lower in 2015, with Orange County averaging 5.86% and Los Angeles at 5.96%.
If you would like an in-depth market report for either Orange County or Los Angeles County please let us know below and we will be happy to e-mail you a copy.