OC’s Class A Shows Stronger Trends Over Others
When looking to understand the behaviors of the commercial real estate market, it is important to understand the variables being examined, along with the measuring tools being used to generate the reporting. In the world of commercial real estate, there are four different types of office properties known as Class A+, Class A, Class B, and Class C; each is created by the specific property details, characteristics, and quality of property.
Class A+ refers to landmark quality, known as a high-rise building with prime central location and usually within a business district. Class A refers to office spaces 100,000 sqft or larger, five or more floors, concrete and steel construction, built since 1980, strong identifiably location and access, business or support related amenities. Class B refers to renovated properties in good locations, newer buildings, smaller in size, wood frame construction, and/or are in a less prime location. Class C refers to older, non-renovated properties of any size and is within an average to fair condition. Knowing each of the four classes and comparing them against each other in monthly, quarterly, and annual reports, helps industry professionals to evaluate the condition(s) of the market.
One such example was seen recently reported by the OC Business Journal. Within the article, details regarding Orange County’s real estate market showed a higher demand in Class A properties over others, specifically, Class B properties when comparing to last year’s third quarter. When evaluating the variables as to ‘why’ Class A would show a higher demand, it was found that due to the decline of lease rates and increase of tenant incentives, the push for greater activity was achieved; causing the availability rate to drop 20.8% over last year’s 7.6%.
The article continued to express possible future tenant behaviors; meaning, as lease rates drop and office paces are filled, the demand for office space will continue to increase, and thus, causing an upward movement of lease rates.
Another interesting observation made in the article described that during 2011’s 4th quarter, larger transactions found in Class A (100,000 sqft or more) made up for more than half of the gross net absorption within the Orange County market; where as in other mid counties, the same class of properties showed a lesser amount with an overall negative net absorption placing Orange County as a leading force above other counties.
In an industry powered by so many variables, it is crucial to work with, trust in, and rely on Real Estate Brokers that show successful, knowledgeable, and forthright behaviors, and are 100% consistent in doing so. ORION Property Partners have proved year-after-year of their commitment to each individual client, placing them as the elite leader in Orange County office space for lease. If you are looking for commercial real estate in Orange County, and or are comparing to other markets, whatever your goals and objectives may be, allow Jay Carnahan and his team to walk you through it. You will not experience service anywhere like you will with ORION.