Lease Rates
- Office space – The average asking full-service gross (FSG) lease rate is now approximately $2.70 per square foot per month, reflecting a modest decline from last year’s peak as landlords adjust pricing and increase concessions.
- Industrial Space – The average asking NNN lease rate is now approximately $1.49 per square foot per month, reflecting a slight increase quarter-over-quarter but down 6% compared to this time last year.
Transaction Activity
- Office space Lease and sale activity in Orange County office market totaled approximately 3,470,765 square feet in Q4 2025, reflecting a 12% increase quarter-over-quarter and signaling stabilization in overall deal velocity.
- Industrial space – 94 lease and sale transactions totaling approximately 3.38 million SF in Q4 2025.
Vacancy
- Office Space – The direct vacancy rate is approximately 14.55% in Orange County, down from 16.07% year-over-year.
- Industrial Space – The vacancy rate is approximately 5.63% in the Orange County market, slightly down fro the 5.72% in Q3 of 2025 and up from 5.09% in Q4 2024
Construction
- Office space – Construction activity in the Orange County office market had pulled back sharply as vacancy has risen. When vacancy was near 10% earlier in the cycle, the pipeline routinely exceeded 2.0 million SF, but with Q4 2025 vacancy at 14.55% space under construction has contracted to approximately 277,079 SF, with no new speculative buildings breaking ground.
- Industrial Space – 1,600,528 SF under construction, 1,935,157 SF planned, with a total base inventory of 234 MSF.
Absorption
- Office Space – Net absorption in the Orange County office market turned positive, with approximately 597,932 SF of space absorbed. Companies are cautious with the office footprints, focusing on efficiency by moving into layouts or upgraded buildings rather than taking on more space than needed.Many tenants have finished right-sizing for hybrid work, helping the market stabilize and build a more balanced foundation for future leasing.
- Industrial Space – 286,194 SF net absorption in Q4, with Paper mart (246,732 SF) and Mohawk Carpet (90,000 SF contributing to gains.
Employment
- Orange County’s unemployment rate stood at 4.4% in September 2025, up from 4.0% a year earlier but still below the statewide rate. The region’s labor market has cooled slightly, with the Professional and Business Services sector posting the steepest decline, losing 3,400 jobs. Employment in transportation, warehousing, and manufacturing has been generally stable, as logistics and e-commerce activity help offset softness in some traditional manufacturing categories. Overall, the labor market remains on solid footing despite the modest rise in unemployment.
Overall
Orange County’s office market faces ongoing challenges as tenants continue hybrid work schedules, giving them more leverage in lease negotiations. In contrast, the industrial market remains tight, with low vacancy, limited new construction, and steady absorption supporting stable to slightly rising lease rates. Tenants in industrial space are likely to continue competing for quality product, while office tenants benefit from a more favorable negotiating environment.
