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Fifth of Orange County Office Space Lies Vacant

April 06, 1986

A fifth of all the office space in Orange County is vacant, and vacancy factors are generally increasing, despite absorption of 2.5 million square feet last year, according to Joseph J. Ehret, vice president/manager of the Orange County branch of Iliff, Thorn & Co.

Orange County demand for research and development and corporate headquarter space doubled last year, while office leasing declined slightly, according to Robert Dunham, president of the Newport Economics Group.

While the countywide office vacancy factor is 19.3%, the John Wayne Airport area was up to 21.5%--from 19.9% in the third quarter of 1985, said Ehret. He added that the greater Anaheim Stadium area's vacancy factor dropped slightly to 19.1%.

Users of larger office space moved to available R&D buildings, causing office absorption, or the net new space occupied, to decline to 3 million feet from 3.3 million feet during 1984, Dunham said.

He pointed out that companies often prefer R&D buildings because normally they are the only tenant and so obtain greater corporate identity.

On the supply side, substantial new construction pushed office vacancies to 6 million square feet while space under construction reached a record 7.1 million feet, Dunham said. Similar trends in the R&D market brought vacant space to 6.2 million feet. Space under construction in this market, however, dropped sharply to 1.8 million.

Ehret of Iliff, Thorn said that industrial space was absorbed at a record level in Orange County last year, he added, with 10.3 million square feet leased. There is still 18.6 million square feet available, he added.

Three million square feet of research-and-development space was absorbed last year, leaving another 10 million square feet vacant or under construction, Ehret added.

"A developer has great opportunity in Orange County, but with vigorous building programs already in place, the swelling vacancy rate must be a major factor in interfacing with the broker during all phases of project planning," Ehret said.

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