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Study Tracks Increase in Commercial Occupancy Rates : Real estate: Businesses related to entertainment lead retail sector's improvement, according to Grubb & Ellis survey.

October 28, 1994|DEBORA VRANA | TIMES STAFF WRITER

NEWPORT BEACH — Orange County's commercial real estate market continued to strengthen during the third quarter, as both office complexes and industrial centers added tenants, according to a study released Thursday.

The office vacancy rate dropped to 18% for the quarter, compared to 19.6% a year earlier, said a report by Grubb & Ellis Commercial Real Estate Services in Newport Beach. The total amount of office space newly occupied during the first nine months of the year was 32.1% more than for the same period last year, the real estate brokerage found.

"Orange County is slowly recovering. We had a good quarter, and I think we will do a little better during 1994 than last year," said George Economos, a senior vice president with Grubb & Ellis. "With vacancies continuing to drop, tenants . . . are now trying to tie up space before low vacancy rates push rents up further."

About 329,757 square feet of office space was taken off the market during the quarter, up sharply from 1993's third-quarter total of 187,434 square feet of newly leased space. Most of the increase was because of the 200,000-square-foot State Compensation Insurance Fund Building in Santa Ana, which was completed and 75% leased during the quarter, the study found.

The retail sector showed significant improvement as well, mostly from entertainment-oriented retailers, such as theaters, restaurants and bookstores, the study found.

"There's been a rush in retail development in Orange County," said John Davidson, a broker with Grubb & Ellis. "That's mostly due to a real entertainment push by developers with the new movie theaters. The food users are also being more inventive, hooking up with theaters."

New retail space is the only commercial construction going on now in the county, according to Grubb & Ellis, with a total of 3.2 million square feet being built, mostly in south Orange County. Of the county's 334 shopping centers with more than 50,000 square feet of space, 201 had vacancy rates of less than 5% during the third quarter, the study found, and 93 centers had no vacancies at all.

Countywide, the vacancy rate for retail space stood at 6.1%, up from 5.2% for the third quarter last year. The increase was mostly because of the fast pace of new construction, the report said.

Less Space Available

The Orange County commercial real estate market improved during the third quarter, as more tenants moved into office, retail and industrial centers. Third-quarter office vacancy rates for five areas of the county:

Location 1993 1994 Change Airport area 18.6% 17.5% -1.1 South County 19.7 14.2 -5.5 Central County 20.5 22.3 1.8 North County 18.9 14.6 -4.3 West County 20.1 16.8 -3.3 Orange County 19.6 18.0 -1.6

Source: Grubb & Ellis Commercial Real Estate Services

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