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LA/Orange County Market Information
Market Information: LA/Orange County
Gradual Recovery Continues
The LA
Basin’s economic recovery continues at a gradual pace with month-to-month job growth resuming and 12-month job losses easing. Manufacturing activity is increasing, exports and imports are rising, the Entertainment sector is rebounding and the housing sector is showing signs of improvement. The LA Basin lost 151,200 payroll jobs over the 12 months ending April 2010 – a 2.4% decline, compared to a national decline of 1.0%. In that period, Los Angeles employment fell by 82,800, Orange County shed 28,400 jobs and the Inland Empire lost 40,000 jobs.
The LA Basin unemployment rate increased to 11.9% in April 2010, from 10.5% a year earlier. The national rate was 9.9% in April 2010, but declined to 9.7% in May.
The Los Angeles County
office market appeared to stabilize in the 2nd quarter of 2010. Negative absorption of office space has declined substantially, although businesses are not leasing additional space until the recovery attains stronger footing. Meanwhile, the vacancy rate was unchanged in the 2nd quarter and rents edged down minimally.
- Net absorption of office space
totaled negative 152,000 SF in LA County in the 2nd quarter of 2010 and totals negative 2.1 million SF year-to-date.
- Available sublease space decreased by 31,000 SF in LA County in the 2nd quarter of 2010 and now totals 3.7 million SF, or 1.1% of standing inventory.
- LA County’s overall vacancy rate held steady at 12.8% in the 2nd quarter 2010, but is up from 11.5% a year ago. The direct office vacancy rate held steady at 11.7% in LA County in the 2nd quarter of 2010, but is up from 10.4% one year ago.
- There is
1.3 million SF of office space under construction or renovation in LA County at mid-year 2010. This is unchanged from the 1st quarter, but down from 3.3 million SF one year ago. Projects currently under construction are 15% pre-leased, compared to 19% the previous quarter and 38% one year ago.
- Office space deliveries totaled
69,185 SF in LA County in the 2nd quarter of 2010, at 44% leased upon delivery.
- LA County office asking rents ticked back slightly in the 2nd quarter of 2010, and have declined 1.2% in the first half of 2010, after falling 7.8% in 2009. Average Class A asking rents have decreased 1.6% in the first half of the year.
- We recorded office investment sales of $178.3 million in LA County in the 2nd quarter of 2010. By comparison, sales totaled $236.5 million the previous quarter and $647 million in all of 2009. Sales prices averaged $221/SF in LA County in the 1st half of 2010, as rents and cap rates have begun to level off.
Orange County’s office market continued to slide in the 2nd quarter, as the financial services industry unloaded more office space. As a result, vacancy continued to increase and rents continues to decline. However, with month-to-month employment now increasing, the Orange County office market may begin to stabilize in the 2nd half of 2010.
- Net absorption of
office space in Orange County totaled negative 587,000 SF in the 2nd quarter of 2010. Through mid-year 2010, net absorption totals negative 1.5 million SF.
- Available sublease space decreased by 119,000 SF in Orange County in the 2nd quarter of 2010. There is 1.2 million SF of sublease space on the market, representing 1.0% of standing inventory.
- Orange County’s overall office vacancy rate rose to 17.0% at mid-year 2010, from 16.5% in the 1st quarter and 14.1% a year ago. The national vacancy rate is 14.8%. The direct office vacancy rate in Orange County rose to 16.0% at mid-year, from 15.4% in the 1st quarter and 13.1% a year ago.
- There is 140,000 SF of medical office space under construction or renovation in Orange County at mid-year 2010.
- Orange County
office asking rents have declined 3.5% in the 1st half of 2010, following a 10.7% drop in 2009. Class A rents declined 2.9% in the first half of the year.
- Office investment sales totaled $229.3 million in Orange County in the 2nd quarter of 2010, compared to $103.8 million in the 1st quarter and $790 million in all of 2009. Office sales prices averaged $236/SF in Orange County in the first half of 2010.
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Q2 2010 |
YTD |
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Los Angeles County |
(72,000) |
(117,000) |
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Orange County |
(211,000) |
(345,000) |
| Los Angeles County |
$13.81/SF/annum |
| Orange County |
$11.82/SF/annum |
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