market reportdaumcommercial.com/wp-content/uploads/2020/...•sales: the median price psf in q2 was...
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///////////////Los Angeles/////////////
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///////////Orange County ///////////
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////////////Ventura /////////////////
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////////// In land Empi re ////////////
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/ ////////////Phoenix/////////////////
///////////////////////////////////////// Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has
not been verified and no express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted
subject to errors, omissions, changes of price, rental or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
Q2 | 2020
Market Report ///////// Orange County Office
KEY TAKE AWAYS MARKET ACTIVITY ECONOMIC OUTLOOK
Direct Vacancy
D
Net Absorption
Overall Vacancy
V
Gross Absorption
Under Construction
Sale Price Change
Rental Rates (FSG)
Deal Volume
U.S. Employment U6 Rate
Interest Rate Changing GDP
Port Traffic Y/Y Δ NYSE Performance
Inflation Change 10 Yr. - 2 Yr. Spread
MARKET
REPORT
EXPERIENCE IN A CHANGING MARKET
@DAUMCOMMERCIAL /////////////////////////////////////////
Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no express representation is made nor is any to be
implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
12.6% -228,462 SF
13.4% 1,259,685 SF
1,541,209 SF
35.0%
$2.80
11.7%
Q2
Office 2020 Orange County
MARKET
• Vacancy Rate: Increased by 30 BPS from revised Q1.
• Net Absorption: Fell by over 247K SF from Q1 into
negative territory.
• Office Supply: Over 1.5M SF is now under
construction.
• Sales: The median price PSF in Q2 was $436.91.
Volume in Q2 was down 11.7%. Sales in the South
County market accounted for 84% of the total
volume in Q2.
• Asking Rents: Saw an increase of $0.06 PSF.
ECONOMIC OUTLOOK
• GDP: Q2 is expected to be the worst quarter in
history with an estimated decline of over 35% from
Q1 due to the unprecedented economic
shutdowns from COVID-19. The NBER has declared
the U.S. is in a recession that started in February.
• Employment: Over 47M Americans have filed for
unemployment since economic shutdowns began
14 weeks ago in order to combat COVID-19.
• Economic Relief : As part of the larger $2.2 Trillion
CARES, Congress appropriated $659B for the
Paycheck Protection Program (PPP) to provide
forgivable loans to small businesses. As of 6/29, over
4.8M loans have been approved. The efficacy of
this program is paramount for the U.S. & CRE.
13.3% 21.2%
3.1% (30 year fixed) -35.3%
-12.6% 22.8%
0.2% 50 BPS
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///////// Market Report
Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no
express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental
or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
Q2
OVERALL VACANCY
INCREASED BY 30 BPS FROM REVISED Q1
GROSS ABORPTION
DROPPED BY 23.7% FROM Q1 TO LOWEST LEVEL ON RECORD
NET ABSORPTION
FELL BY 247K SF FROM Q1 INTO NEGATIVE LEVELS
ASKING RENTS
INCREASED BY $0.06 PSF IN Q2 TO $2.80 PSF
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
Direct Vacancy Total Vacancy Historical Average
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
(2,000,000)
(1,500,000)
(1,000,000)
(500,000)
0
500,000
1,000,000
1,500,000
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
Net Absorption SF Direct Overall Vacancy
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
Gross Absorption SF Total Historical Average
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
$0.20
$0.70
$1.20
$1.70
$2.20
$2.70
$3.20
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
Office Gross Rent Direct Overall Vacancy
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///////// Market Report
Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no
express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental
or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
CONSTRUCTION ACTIVITY
INCREASED TO OVER 1.5M SF IN Q2
LEASING ACTIVITY
SHARP DECLINE OF 42% FROM Q1 TOTALING JUST OVER 1M SF.
SALES
VOLUME FELL 11.7%. MEDIAN PRICE PSF FOR Q2 WAS $436.91
Q2
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
Leasing Activity SF Direct Leasing Activity SF Sublet
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
Under Construction SF
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
$400.00
$450.00
$500.00
$0
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
200
12
00
22
00
32
00
42
00
52
00
62
00
72
00
82
00
92
01
02
01
12
01
22
01
32
01
42
01
52
01
62
01
72
01
82
01
92
02
0
Sales Volume Med. Price PSF
Linear (Med. Price PSF)
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///////// Market Report
Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no
express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental
or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
VACANCY BREAKDOWN SQUARE FOOT BREAKDOWN– 87,474,108 SF MARKET SIZE
VOLUME BREAKDOWN AVERAGE RENT PSF
Q2
42%
20%
10%
22%
6%
Airport
Central County
North County
South County
West County
12.50%
14.54%
11.13%
12.08%
10.97%
13.62%
15.12%
11.62%
12.61%
11.54%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
Airport Central
County
North
County
South
County
West
County
Direct Vacancy Rate Overall Vacancy Rate
$3.04
$2.50$2.29
$3.14
$2.36
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
Airport Central
County
North
County
South
County
West County
Average Office Rent FSG
$0.00
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
$800.00
$0.00
$50,000,000.00
$100,000,000.00
$150,000,000.00
$200,000,000.00
$250,000,000.00
Airport Central
County
North
County
South
County
West
County
Sales Volume Price PSF
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///////// Market Report
Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no
express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental
or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
METHODOLOGY
& TERMINOLOGY
Methodology
Non-Owner occupied, multi-
tenant office buildings that are
30,000 square feet & greater.
Direct Vacant SF
Space that is vacant and ready
for occupancy by a user. The
space is being offered for lease
or sale directly from the landlord.
Total Vacant W/ Sublet SF
Space that is vacant and ready
for occupancy by a user. The
space is being offered for lease
or sale by the landlord or for
sublease by the current tenant.
Direct Vacancy Rate
Total vacant direct space
(vacant space for lease or sale
from the landlord or owner)
divided by the total rentable
square footage for existing
buildings only.
Vacancy W/ Sublet Rate
Total vacant direct space and
sublease space divided by the
total rentable square footage for
existing buildings only.
Gross Absorption
The total change in occupied
space over a given period of
time, counting space that is
occupied but not space that is
vacated by tenants. Gross
absorption differs from leasing
activity, which is the sum of all
space leased over a certain
period of time.
Net Absorption
The net change in occupied
space over a given period of
time, calculated by summing
all the positive changes in
occupancy (move ins) and
subtracting all the negative
changes in occupancy
(move outs).
Under Construction
Planned buildings for which
construction has started but
have not yet been granted
a Certificate of Occupancy.
Planned buildings are
not included.
Completed in 2020
New buildings with original
construction completed in
the year 2020 and granted
a Certificate of Occupancy.
Renovated buildings are
not included
LOS ANGELES, CALIFORNIA
801 S. Figueroa Street, Suite 600
Los Angeles, CA 90017 213-626-9101
LOS ANGELES NORTH, CALIFORNIA
21820 Burbank Boulevard, Suite 201
Woodland Hills, CA 91367
818-887-3600
SANTA CLARITA VALLEY, CALIFORNIA
28494 Westinghouse Place, Suite 312
Valencia, CA 91355
661-705-2299
SAN GABRIEL VALLEY, CALIFORNIA
13181 Crossroads Pkwy. N, Suite 100
City of Industry, CA 91746 562-695-7244
SOUTH BAY, CALIFORNIA
1025 W. 190th Street, Suite 420
Gardena, CA 90248
310-538-6700
MID-COUNTIES, CALIFORNIA
13810 Cerritos Corporate Drive, Suite C
Cerritos, CA 90703
562-207-3300
ORANGE COUNTY, CALIFORNIA
4400 MacArthur
Boulevard, Suite 950 Newport Beach, CA 92660
949-724-1900
VENTURA & SANTA BARBARA, CALIFORNIA
751 Daily Drive, Suite 105 Camarillo, CA 93010
805-987-8866
INLAND EMPIRE, CALIFORNIA
3595 E. Inland Empire Boulevard, Bldg. 5
Ontario, CA 91764
909-980-1234
PHOENIX ARIZONA
1702 E. Highland Avenue, Suite 120
Phoenix, AZ 85016
602-957-7300
DAUM OFFICES
Q2
/////////////////////////////////////////
///////////////Los Angeles/////////////
/////////////////////////////////////////
///////////Orange County ///////////
/////////////////////////////////////////
////////////Ventura /////////////////
/////////////////////////////////////////
////////// In land Empi re ////////////
/////////////////////////////////////////
/ ////////////Phoenix/////////////////
///////////////////////////////////////// Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has
not been verified and no express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted
subject to errors, omissions, changes of price, rental or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
Economic Overview
///////// Q2 2020
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//// Q
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///////// Market Report
Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no
express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental
or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
PORT ACTIVITY FELL BY 17.1% FROM Q3. DECLINE EXPECTED IN Q2-20 GDP IN Q1 FINISHED AT -5.0%. Q2 EST. TO BE WORST IN HISTORY
THE IMPACT FROM COVID-19 BEGINS TO SHOW
Q2
-40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Real GDP Average Real GDP
*-35.3% for 2Q20 based on CNBC/Moody’s Analytics Rapid Update Survey
LEISURE & HOSPITALITY HIT HARD DUE TO SHUTDOWNS FROM COVID-19
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
'20'19'18'17'16'15'14'13'12'11'10'09
Imports Exports Empties
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Recession U6 Rate Official Rate
-82
-596
-1,145
-373
-2,003
-582
-6
-316
-249
-2,156
-2,344
-7,043
-1,091
-1,565
-8,000 -6,000 -4,000 -2,000 0
Government
Other Services
Leisure and Hospitality
Education and Health Services
Professional and Business Services
Financial Activities
Information
Utilities
Transportation and Warehousing
Retail Trade
Wholesale Trade
Manufacturing
Construction
Mining and Logging
Na
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Ov
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//// Q
2 2
02
0
///////// Market Report
Although all information is furnished regarding for sale, rental or financing is from sources deemed reliable, such information has not been verified and no
express representation is made nor is any to be implied as to the accuracy thereof, and it is submitted subject to errors, omissions, changes of price, rental
or other conditions, prior sale, lease or financing, or withdrawal without notice.
www.daumcommercial.com | O N C O R I N T E R N A T I O N A L
10-2 YEAR BOND SPREAD INCREASED AS NEAR-TERM PROSPERITY DECLINES THE STOCK MARKET HAD ITS BEST QUARTER IN OVER 20 YEARS
CPI FELL DRASTICALLY IN Q2 THE FEDERAL RESERVE CUT THE FED FUNDS RATE TO 0.0-0.25%
Q2
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Recession CPI All Item
Less Food & Energy Fed Inflation Target
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
'00'01'02'03'04'05'06'07'08'09'10'11'12'13'14'15'16'17'18'19'20
Recessions 10-Yr Treasury Rates
Federal Funds Rate 30-Yr. Fixed Rate Mortgage
-150%
-100%
-50%
0%
50%
100%
150%
200%
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Recession DOW Jones S&P 500 NASDAQ
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
'00'01'02'03'04'05'06'07'08'09'10'11'12'13'14'15'16'17'18'19'20
Recession Bond Spread