Experts Recommend Investors Buy Orange County Commercial Real Estate
Online real estate marketplace Ten-X reported in its latest U.S. Office Market Outlook that the Orange County commercial real estate market is one of the top five markets where investors should consider buying office real estate.
In a statement, the company reported that the Orange County commercial real estate market, among other real estate markets such as Portland and Miami “are being fueled by growing economies, where strong demographics and consistent job growth are fueling robust demand for office space.
Ten-X references Reis data which shows the national vacancy rate for office space has been at 16 percent for three consecutive quarters. Vacancies are now 40 basis points lower than a year ago and 160 but they still remain above levels seen during the last economic cycle
The company also reported that investors should consider selling their properties in cities such as Houston, Cleveland, suburban Maryland, Memphis and Milwaukee.
“These cities are being undermined by weakening labor markets, which have reduced demand for office space and significantly slowed absorption rates,” the statement said.
Ten-X predicts a moderate upturn in the office sector as the current economic expansion advances. Ten-X expects returning factors to drive vacancies to a low of 15.3 percent in 2018 before reverting to about 17.6 percent during a downturn scenario in the following two years.
According to the report, rent growth is expected to appear after a cooling period and will rise in 3 percent increases a year in 2017 and 2018, reaching a peak of over $27 per square foot before contracting as vacancies begin to rise again.
“After a long, gradual recovery following the last recession, the office sector has seen its progress slow significantly over the last year,” said Peter Muoio, chief economist of Ten-X. “The resilient economy makes it likely that the current malaise [in the office sector] is only temporary. Overall demand should increase as employers continue to add jobs over the next two years, which bodes well for investors’ long-term prospects in most areas of the country.”