Look for a recovery. But not a quick one. That’s the word on 2003 and 2004, according to the Casden Real Estate Economics Forecast. The University of Southern California’s Casden Forecast looks at Grubb & Ellis data for the Orange County, Inland Empire and Los Angeles County office and industrial markets. Orange County’s office market will begin to rebound in 2003 from a steep downturn that saw vacancy rates reach 15.8% this year while rents plummet about 20% from their highs. The good news: OC net absorption has recently turned positive, asking rents for class A properties have started to rebound, and vacancy rates have declined somewhat, according to Raphael Bostic, director of the Casden forecast. But the recovery will be slow because of new space. A huge supply of office space, more than 1.5 million square feet, came on the South Orange County market in the past three years. It will take at least two years for this space to be absorbed in areas such as Aliso Viejo, Ladera Ranch and San Clemente. “On the positive side, South County will continue to be Orange County’s fastest-growing market, with more businesses locating there and more homes being built,” Bostic said. The county’s industrial market has been hurt by high-tech exposure and a slowdown in non-durable manufacturing. In its favor is the large amount of trade-oriented companies. “Industrial rents and vacancies should remain relatively stable through the third quarter of 2003, when rents will start to increase and vacancies will begin to decline as the region’s economy recovers,” Bostic said.
