- Q1 sales volume sees modest growth of 8% year-over-year
- average price per square foot rises 25% to $240
- largest sale of Q1 closed by Karma Automotive in Irvine
- 5 major office projects on track for Q2 delivery
Buyer appetite for Orange County office assets has been rising steadily over the past four years, reaching its peak in the fourth quarter of 2015, when office sales volume reached $884 million. Home to a plethora of large tech and semiconductor corporations such as Broadcom, Blizzard and Verizon, the Orange County boasts a healthy job market and an unemployment rate of just 3.7% as of February 2017. Consequently, the county presents a more affordable alternative to increasingly expensive markets such as Los Angeles, San Francisco or the Bay Area, for young professionals and office investors alike.
We used Yardi Matrix data to analyze all sales for office buildings larger than 50,000 square feet (see ‘Methodology’ section) to close in Orange County in Q1. We also looked at new office projects scheduled for completion in the second quarter of 2017, using the same data source.
Q1 Office Sales Volume Totals $293M
Average Price per Square Foot Rises 25% Y-o-Y
Chinese-Owned US Automaker Closes Largest Q1 OC Deal
What’s Next? Projects on Track for Q2 Delivery
Even though there were no office projects over 50,000 square feet to be delivered in the first quarter of 2017 in the county, the market is set to pick up the pace in Q2. Five developments are currently underway and scheduled for completion in the second quarter, encompassing a total of over 1 million square feet. The largest project to come online in Q2 is Trammell Crow’s Boardwalk development at 18691 Jamboree Road in Irvine, Calif. The Class A office campus incorporates two nine-story buildings totaling 550,000 square feet, to be connected through outdoor walkways and indoor bridges. According to the developer, Boardwalk will include 5,000 square feet of restaurant-focused retail space, 2 acres of landscaped open space, as well as on-site conference and training centers.
- Square footage parameters – over 50,000 sq. ft.;
- Minimum amount per transaction – $5,000,000;
- Transactions recorded until April 12th, 2017;
- Some sale prices were calculated based on a ‘tax-transfer’ formula;
- We excluded ground lease, ownership stake, controlling interest and portfolio deals from our calculation of the average price per square foot;
- Data source: Yardi Matrix.