Office vacancies in Orange County hit 12.62% and the availability rate shot up to 18% at the end of the first quarter as the negative net absorption trend continued to beset landlords, some of whom are beginning to offer free rent for the first time in several years.
Class-A office property is hardest hit with a firstquarter vacancy rate of 16.2%, up from 14.1% at the end of 2007 and compared to a low of 6.4% at the end of 2005. The swing toward a more favorable market for tenants may be sustained for some time as there are two chief factors working against office owners and managers. First, there are no signs the economic slowdown will stabilize soon. Economist Anil Puri of Cal State Fullerton recently forecast that the Orange County economy has worsened and employers will shed 15,000 jobs in 2008.