So, where are we in the great pursuit of a healthy economy and a healthy office market?
The good news is that the total number of non-farm jobs in the county has risen for the third straight month. Further, the unemployment rate continues to tighten, down .6% from 6.3% in March to 5.7% last month. Leading the charge over the last 12 months were education, health services, and financial services. Between these 3 categories Orange County has seen almost 15,000 additional jobs. Toss in leisure, hospitality, and construction, that figure jumps to nearly 26,000.
Assuming 60% of these new workers will work in a traditional office building, that equates to increased demand for approximately 2.7 million square feet of office space (assuming 175 square feet per person) That is roughly 2.4% of the total Orange County office market (113,000,000 square feet) or nearly 14% of the total vacancy.
While this is indeed good news, I am a bit concerned with the category of “financial services” Unfortunately, the 7,500 jobs added within this sector are not all CPA’s, wealth managers, and stock brokers. Rather, the majority of them are working in the mortgage industry. When it comes to employment figures, all jobs are NOT created equal. When interest rates begin to tick up, (as they already have) even just a little, many of these “financial services” jobs may disappear leaving behind vacant space and oceans of empty cubicles to go along! That said, if new home sales continue to pick up, there may be hope for stabilization in this sector.
All this to say, we’re starting to see some signs of recovery in the office market and some landlord’s have started to increase rents corresponding with their increased leasing velocity. However, any recovery we do have will likely be slow and steady. Which, after all, is not a terrible thing.
If you have questions about your office lease or the general office market, please feel free to contact me at 949-721-8880 or via email at: firstname.lastname@example.org