Randy Mason’s News for Thought
June 6, 2011	Volume 1, Number 1
Randolph T. Mason CCIM, SIOR Senior Vice President at Lee & Associates Commercial Real Estate 111 Pacifica Ste. 130 Irvine, CA 92618 P: (949)790-3113 F: (949)727-1299 C: (949)705-7000 Email: [email protected] We’re on the Web! www.occree.com “The best prize that life has to offer is the chance to work hard at a work worth doing.” ~Theodore Roosevelt	OFFICE MARKET BEGINS 2011 WITH NEW LIFE Net absorption of office space in 2011 was in the black for the first time in four years as the year ended with all signs -except rents- generally improving for Orange County landlords, including available space falling for a third consecutive quarter. Even though 21.7% of office space remains available, the combination of comparative healthy year-to-date demand, which began to surge in Q2, plus the steady downward trajectory in vacancies are clear signals that the steep four-year slide has come to a halt. Additionally, investors buying office properties represent another strong indication that the market hit bottom in 2010. Increased acquisitions of distressed local trophy assets and other Class A buildings in 2010 are serving to put a floor under values, which have plunged further than any time since the Great Depression. The turnaround in office data mirrored 2010’s uptick in employment in professional and business services, health, education and leisure, and hospitality. Although overall employment fell slightly last year, economic forecasters Chapman University and Cal State Fullerton predict slight job gains in 2011 in every major category except construction. This year, the typical year-end slowdown in transaction activity was confounded by surprisingly robust net absorption. Despite the fewest fourth-quarter lease deals in three years, Q4 net absorption totaled 392,602 sq. ft., the most since the start of 2007 based on Lee & Associates’ analysis of office buildings larger than 30,00 sq. ft. The county’s office market closed out the year with net positive absorption of 244,603 sq. ft., a mammoth swing from the negative 2.7 million sq. ft. of 2009 and the most since 4.3 million-sq.-ft., three-year tumble. After falling for the past three quarters, occupancy increased in Q4 to 82.2%, equaling the rate at the end of 2009. Asking rents fell again in Q4, although at a slower pace. Something to think about… If your lease is coming up for expiration in the next 18 months or less, you owe it to your business to discuss your options- there may be more than you think! Why one should not wait If your lease is up in the next 18 months or less, now is the time to take action. Whether you are contemplating relocating your business or planning on staying in your space for the next 5-10 years, we can help. The more time you allow for consideration of various locations, the more leverage you will have with the landlord to reduce costs, gain operational efficiencies and save money. Even if you plan on staying in the same location, making the landlord wonder if you are relocating can also create leverage and possibly save you money on monthly expenses. Either way, time creates negotiation leverage! Why us? As a market leader in tenant representation, we offer the best and most complete corporate real estate services exclusively on behalf of the tenants or buyers. We don’t have a stake in both sides of the transaction that might compromise your outcome. We work exclusively under written contract with our clients. Our contract clearly spells out the services we provide and the obligations of the parties. Partial List of Services: Lease Review—Renegotiations with Existing Landlord—Complete Relocation—Investment Purchases—Contract Negotiations—Consulting Services—Subleasing—Built-to-suit—1031 Exchanges—Sale-leaseback