Orange County Commercial Office Space for Rent

Q4 2025

Orange County Commercial Real Estate Market Report

Focus: Q4 2025 Market Trends

Executive Summary

The Orange County (OC) commercial real estate (CRE) market is facing a period of stabilization defined by sector divergence [1]. The Office and Industrial markets are navigating supply challenges and tenant caution, while the Retail and Multifamily sectors remain fundamentally tight due to low vacancy and demographic strength [1, 5]. Construction costs and high interest rates are severely limiting new speculative development across all asset classes [1, 4].

TenantBase Proprietary Data [20] highlights the distribution of active tenant demand over the last 90 days (370 total deals): Retail/Storefront dominated with 47.84% of all searches, Warehouse was the second most active sector at 43.0%, and Office accounted for 9.46% [20].

Office Market

Market Overview

The OC office market is facing significant uncertainty due to remote work, pushing developers to scrap new projects for the first time since the Global Financial Crisis in 2008 [1]. The market is undergoing a "capitulation phase" for non-trophy assets [1].

  • Vacancy & Availability: Total vacancy reached 19% in Q3 2025 [3], climbing for the 11th consecutive quarter [3]. Direct vacancy was 12% in Q4 2024 [3].
  • Net Absorption: Quarterly absorption turned positive in Q3 2025, totaling 370,812 SF in net gains, driven primarily by the Airport Area and South County [1]. Despite this, year-to-date net absorption remained negative [3].
  • Rental Rates: Average Class A asking rent decreased by 0.6% year-over-year (YOY) to $3.11 per SF [1]. However, newer high-end projects in areas like Newport Beach command rates between $4.50 – $5.95 per SF (FSG) [1].
  • Adaptive Reuse: The market is poised to lose inventory as roughly 2 million SF of office product has been removed since the beginning of 2023 [3].

TenantBase Activity [20]

  • Demand Share: Office accounted for 9.46% (35 deals) of total search volume [20].
  • Lease Term Preference: Tenant demand shows a strong skew toward short-term flexibility [20]:
    • Less than one year: 51.52% of deals.
    • 2-3 Years: 21.21% of deals.
    • 3-5 Years: 15.15% of deals.
  • Size Requirements: The average lower SF required for a Less than one year term is 462 SF, compared to 2,750 SF for a 3-5 Years term [20].

Industrial & Warehouse Market

Market Overview

The industrial market is undergoing a strong correction due to a spike in sublease inventory and weakened demand [2]. OC's vacancy remains the second lowest in the Southwest, behind Los Angeles [1].

  • Vacancy & Rent: Overall direct vacancy rose to 5.5% in Q3 2025 [2], the 11th consecutive quarterly increase [3]. Average asking rents dropped to $1.49 per SF NNN [1], a 6.3% decrease YOY [2].
  • Net Absorption: Net absorption remained negative in Q3 2025 at -202,003 SF [2].
  • Small Bay Segment: Small-bay facilities (under 50,000 SF) continue to outperform, with a low overall vacancy rate of 4.1% [2].
  • Supply Pipeline: The construction pipeline is modest at 1.6 MSF [1]. Development has slowed significantly, with no new projects breaking ground in the Inland Empire (a major competitor) in Q3 2025 [3].

TenantBase Activity [20]

  • Demand Share: Industrial/Warehouse accounted for 43.0% (159 deals) of total search volume [20].
  • Lease Term Preference: Flexibility is key, with a focus on short and mid-terms [20]:
    • 1-2 Years: 37.33% of deals.
    • 3-5 Years: 30.67% of deals.
    • 2-3 Years: 16.0% of deals.
  • Size Requirements: Tenants seeking the longest terms require substantially larger space. The average lower SF required for a 5+ Years term is 5,000 SF [20].

Retail Market

Market Overview

The retail market is a regional bright spot, showing strong fundamentals supported by high income demographics and minimal new construction [1, 4].

  • Vacancy & Availability: Retail vacancy remains tight, hovering between 3.6% and 4.0% [4, 12]. Availability has fallen to a new cyclical low of 3.8% [4].
  • Net Absorption: Net absorption reached 355,407 SF YTD in Q3 2025, a 416% increase YOY [4].
  • Rental Rates: Average asking rent increased to $2.65 per SF (NNN) in Q3 2025 [4]. Average rents for the market are approximately $39.00 per SF (NNN) [4].
  • Construction: The construction pipeline is minimal, representing just 0.1% of total retail inventory [1].

TenantBase Activity [20]

  • Demand Share: Retail/Storefront activity dominated with 47.84% (177 deals) of total search volume [20].
  • Lease Term Preference: Retail tenants show the highest preference for stability [20]:
    • 3-5 Years: 30.59% of deals.
    • Less than one year: 23.53% of deals.
    • 5+ Years: 22.35% of deals.
  • Top Locations: Tenant interest is highly concentrated in core cities [20]:
    • Santa Ana: 25 deals (6.76%).
    • Irvine: 22 deals (5.95%).
    • Anaheim: 16 deals (4.32%).

Multifamily Market

Market Overview

The OC multifamily market remains one of the tightest in the nation, supported by low supply and a resilient job market [5].

  • Vacancy & Occupancy: The vacancy rate held firm at 4.0% in Q3 2025, the second lowest in the nation [5]. Occupancy in stabilized properties was 96.5% as of July 2025 [14].
  • Rents & Concessions: The overall average rent per unit ended Q3 2025 at $2,936 [6]. Rent growth was modest at 1.6% YOY [5]. Asking rents rose 0.3% on a trailing three-month basis through August [14].
  • Construction: Supply is muted, with only 6,000 units under construction [5]. Deliveries are forecast to mirror the five-year high of 2,800 units in 2024 [5].
  • Investment: Quarterly sales volume totaled approximately $159 million in Q3 2025 [5].

Sources

  1. Newmark: Orange County Real Estate Market Reports | Newmark
  2. Kidder Mathews: ORANGE COUNTY INDUSTRIAL - Kidder Mathews
  3. Los Angeles Times: Q3 2025 CRE Report: Southern California Industrial Development Slows Amid Economic Uncertainty While South Bay Office Leases Grow
  4. Kidder Mathews: Orange County Retail Market Report | Kidder Mathews
  5. Matthews: Orange County, CA Multifamily Market Report Q3 2025 - Matthews
  6. CBRE: Orange County Multifamily Figures - Q3 2025 - CBRE
  7. NAI Capital: Orange County's Retail Market Recovery Remains Uneven in 2025 - NAI Capital
  8. Newmark: Orange County CRE Market 2025: Trends, Strategies & Market Risks - AllView Real Estate
  9. LA Times: Southern California Industrial Poised to Rebound in 2025 - Los Angeles Times
  10. CBRE: Orange County Retail Figures Q2 2025 - CBRE
  11. LA Times: Orange County Summer 2025 Industrial Market Report - Hughes Marino
  12. CBRE: Orange County Retail Real Estate Market Update | Q4 2024
  13. J.P. Morgan: Orange County Multifamily Market Outlook | Chase - J.P. Morgan
  14. Yardi Matrix: Orange County Multifamily Market Report – October 2025 - Yardi Matrix
  15. L3 Real Estate: October 2025 Orange County Housing Market Predictions: 7 Powerful Insights Shaping the Future - L3 Real Estate
  16. [CBRE: Orange County Multifamily Figures - Q3 2025 - CBRE (Different URL/Data Set)]
  17. [Kidder Mathews: ORANGE COUNTY OFFICE - Kidder Mathews (Q4 2024 Data)]
  18. [Marcus & Millichap: Orange County Industrial Market Report - Marcus & Millichap]
  19. [Southern California Commercial Real Estate Market – Q3 2025 Outlook Overview of Current Conditions (SCCAI)]
  20. TenantBase Proprietary Market Data (Last 90 Days)

Information in this report is aggregated from various third-party sources and synthesized using artificial intelligence and other research tools. While we believe these sources to be reliable, we cannot guarantee the absolute accuracy or completeness of the data. This report is intended for informational purposes to provide market insight and should be independently verified prior to any use in a real estate transaction or legal commitment.