Breaking Down Orange County’s Office Submarkets

The Orange County office market can be a fast-paced environment. Because of this, it’s important for investors, landlords, and tenants alike to have a thorough understanding of the market’s intricacies in order to make the best real estate decision possible.

An important part of the Orange County market to understand is its submarkets. In this article, we’ve broken down the five primary Orange County office submarkets and gone into detail on their similarities, differences, and unique market factors.

Greater Airport Area

As its name suggests, this submarket is located in the area surrounding John Wayne airport just outside of Irvine. Its boundaries are roughly the Santa Ana River to the west, the coast to the south, CA-133 to the east, and Portola Pkwy to the north. The submarket encompasses areas like Costa Mesa, San Joaquin Hills, and much of Irvine.

According to CoStar, the Greater Airport Area submarket is currently home to 53.9 million square feet of existing office space. As of 2022 Q3, the submarket has a total vacancy rate of 13.3%. The average asking base rate for office space in the submarket is $30.64 per square foot.

The Greater Airport Area submarket is one of the more wealthy submarkets in Orange County, with a 2022 median household income of $114,885 according to Esri. However, it is also one of the smallest submarkets from a population perspective with 466,376 residents calling the submarket home in 2022. The median age of these residents is 36.1 years old, and 35.2% of residents 25 or older have a Bachelor’s degree. Unemployment in the submarket currently sits at 4.3%.

South / Laguna Hills

The west side of the South / Laguna Hills submarket shares a border with the Greater Airport Area submarket and is roughly bounded by the coast to the south, San Clemente to the east, and CA-241 to the north. Along with Laguna Hills, the submarket encompasses areas like Mission Viejo, Laguna Niguel, Laguna Beach, and Lake Forest.

The South / Laguna Hills office market is currently comprised of 36 million square feet of existing office space, 9.2% of which was vacant as of this writing. The average asking base rate for office space in the submarket is $27.95 per square foot according to CoStar.

This submarket is the wealthiest of the five primary Orange County submarkets with a 2022 median household income of nearly $130,000 according to Esri. The submarket also has the oldest population, with the median age of its residents currently sitting at 40.8 years old. Similarly to the Greater Airport Area submarket, roughly 35% of its residents 25 or older have a Bachelor’s degree, and unemployment currently averages 4.1%.

West

The West submarket shares a portion of its eastern border with the Greater Airport Area submarket. It is also bounded by the San Gabriel River to the west, the coast to the south, and the northern boundaries of Cypress, Stanton, and Garden Grove city limits to the north. The submarket encompasses other areas like Midway City, Huntington Beach, and Westminster.

The West submarket is the smallest of the five primary submarkets from an office space perspective, currently having only 14.1 million square feet of existing office space according to CoStar. However, its vacancy rate is similar to the other submarkets, currently totaling 7.5% in 2022 Q3. Its average asking base rate for office space of $27.59 per square foot also puts it on par with the other submarkets.

This submarket is the second-largest submarket from a total population point of view, totaling 830,829 residents in 2022 according to Esri. The median age of those residents is 38.5 years old, and 23.89% of them 25 years old or older have attained a Bachelor’s degree. While the submarket’s 2022 median household income of $93,252 is the lowest income of the five primary submarkets, its unemployment rate of 4.6% is not substantially different from the others.

Central

Orange County’s Central submarket is, as you might guess, centrally located in Orange County and shares borders with the other primary submarkets. It is roughly bounded by I-405 to the south, CA-22 and CA-57 to the west, CA-91 to the north, and CA-261 to the east. The submarket includes key areas like Santa Ana, Orange, and Tustin.

The Central submarket is one of the larger office submarkets in Orange County. According to CoStar, its current existing office inventory is 32.5 million square feet, putting it below the Greater Airport Area and South / Laguna Hills submarkets but still above the rest. Its vacancy rate of 12.3% in 2022 Q3 gives it the second-highest vacancy on a percentage basis of the primary submarkets. The average asking base rate for office space in the submarket is currently $25.40 per square foot.

While its office market might be relatively large, the population in the Central submarket is relatively low. According to Esri, the total population of the submarket in 2022 is 333,153 with a median age of 35.5 years old. The median household income of its residents is $99,283 in 2022, giving it the third-highest ranking for this metric. The average unemployment rate for the submarket in 2022 is 4.2% and 27.56% of the population over 25 or older has a Bachelor’s degree.

North

Last but certainly not least, the North submarket is bounded roughly by the West submarket to the south, the Central submarket to the east, CA-39 to the west, and CA-72 to the north. It includes areas like Anaheim, Fullerton, La Habra, and Yorba Linda.

The North submarket is also a relatively small submarket when compared to the Greater Airport Area and South / Laguna Hills submarkets. It currently has 21.3 million square feet of existing office space according to CoStar, 6.8% of which is vacant as of this writing. The average asking base rate for office space in the submarket is $25.65 per square foot.

From a demographic perspective, the North submarket shares many similarities with the West submarket. Its population is over 800,000 (895,295 in 2022 to be exact) and the median household income of its residents is just below $100,000. The median age in the North submarket is 36.5 in 2022, and 26.12% of residents 25 or older have a Bachelor’s degree. The submarket’s unemployment rate is currently the highest of the five primary submarkets at 5.1% but is still relatively low compared to other areas of the state and country.

Conclusion

We hope this overview of Orange County’s five primary office submarkets serves as a useful tool for you as you navigate your real estate decision in Orange County. If you have any questions or would like any additional information, our experienced team would be happy to help.