Companies Start Taking Larger Office Space Again in Orange County
Taco Bell has signed the largest lease in nearly five years, as the market recovers.
As conversions have picked up in recent years, smaller office space has come into higher demand. However, that's starting to shift in Orange County and companies are taking large blocks of space again.
Since the pandemic, nearly 10 million square feet of Orange County office space has been converted, demolished or slated for redevelopment.
This Southern California market has only 12 contiguous office blocks of 50,000+ square feet, with six in the Irvine Spectrum, according to JLL.
Taco Bell's 254,000-square-foot lease at its Alton HQ this year was the largest Orange County lease in five years.
At the same time, landlords broke up many large floors into smaller suites as hybrid work became the norm, according to Billy Shaw, associate at JLL.
“Today we're seeing more large block requirements than we have in years, led by industries such as aerospace and defense and supported by a healthier economy,” Shaw told GlobeSt.com.
“Many of the short-term leases signed during the pandemic are also expiring, and those tenants are competing with tenants displaced by redevelopment for the same Class A, highly amenitized buildings. The result is fewer large blocks, more large occupiers competing for what's left, and landlords with more leverage than they've had in years.”
Available large blocks of office space are concentrated in South County and the Airport Area. Irvine Spectrum has six blocks totaling about 611,000 square feet, Irvine/Tustin Legacy has four blocks totaling about 453,000 square feet, with Costa Mesa's coming in at two blocks totaling about 122,000 square feet.
Tenant demand for 100,000+ square feet of space outpaces supply, Shaw said. More than eight tenants are seeking 100,000+ square feet, with combined requirements exceeding 1.2 million square feet, surpassing current large-block availability.
OC Vibe remains the only office building under construction, with approximately 168,000 square feet available and an estimated completion of Q4 2026.
Although market conditions remain uneven across property classes and submarkets, tenant demand has strengthened, particularly for high-quality office space.
According to Newmark's third-quarter report, asking rents reached a record average of $3.04 per square foot and sublease availability declined to 1.9% of inventory, its lowest level since 2015.
Leasing activity accelerated during the third quarter in particular. Savills reported approximately 2.1 million square feet of signings, representing a 59.7% increase over the second quarter and a 44.6% increase year-over-year.
Significant transactions included Envista Holdings' 117,802-square-foot relocation in Irvine Spectrum and Anduril Industries' 102,000-square-foot lease in the Airport Area. Class A properties continued to outperform older office buildings as tenants prioritized modern facilities, amenities and higher-quality locations.
Cushman & Wakefield's research also showed that Class A properties continued to attract tenants while Class B buildings experienced occupancy losses. Overall, the 2026 results suggest Orange County's office market is recovering, with improving fundamentals and stronger demand for well-located, higher-quality properties.
However, older buildings and less competitive locations continue to face leasing challenges.
Since the pandemic, nearly 10 million square feet of Orange County office space has been converted, demolished or slated for redevelopment.
This Southern California market has only 12 contiguous office blocks of 50,000+ square feet, with six in the Irvine Spectrum, according to JLL.
Taco Bell's 254,000-square-foot lease at its Alton HQ this year was the largest Orange County lease in five years.
At the same time, landlords broke up many large floors into smaller suites as hybrid work became the norm, according to Billy Shaw, associate at JLL.
“Today we're seeing more large block requirements than we have in years, led by industries such as aerospace and defense and supported by a healthier economy,” Shaw told GlobeSt.com.
“Many of the short-term leases signed during the pandemic are also expiring, and those tenants are competing with tenants displaced by redevelopment for the same Class A, highly amenitized buildings. The result is fewer large blocks, more large occupiers competing for what's left, and landlords with more leverage than they've had in years.”
Available large blocks of office space are concentrated in South County and the Airport Area. Irvine Spectrum has six blocks totaling about 611,000 square feet, Irvine/Tustin Legacy has four blocks totaling about 453,000 square feet, with Costa Mesa's coming in at two blocks totaling about 122,000 square feet.
Tenant demand for 100,000+ square feet of space outpaces supply, Shaw said. More than eight tenants are seeking 100,000+ square feet, with combined requirements exceeding 1.2 million square feet, surpassing current large-block availability.
OC Vibe remains the only office building under construction, with approximately 168,000 square feet available and an estimated completion of Q4 2026.
Meaningful Recovery So Far
The Orange County, California, office market showed a meaningful recovery in the first three quarters of 2026, with improving occupancy, stronger leasing activity, declining vacancy and rising rental rates, according to Newmark.Although market conditions remain uneven across property classes and submarkets, tenant demand has strengthened, particularly for high-quality office space.
According to Newmark's third-quarter report, asking rents reached a record average of $3.04 per square foot and sublease availability declined to 1.9% of inventory, its lowest level since 2015.
Leasing activity accelerated during the third quarter in particular. Savills reported approximately 2.1 million square feet of signings, representing a 59.7% increase over the second quarter and a 44.6% increase year-over-year.
Significant transactions included Envista Holdings' 117,802-square-foot relocation in Irvine Spectrum and Anduril Industries' 102,000-square-foot lease in the Airport Area. Class A properties continued to outperform older office buildings as tenants prioritized modern facilities, amenities and higher-quality locations.
Challenges Remain
Despite the improvement, challenges remain. Cushman & Wakefield reported a 14.2% vacancy rate in Q3, with modestly negative quarterly absorption, although vacancy was down 280 basis points year-over-year. Meanwhile, Newmark's report showed net absorption was positive through the first nine months of the year at about 1.2 million square feet.Cushman & Wakefield's research also showed that Class A properties continued to attract tenants while Class B buildings experienced occupancy losses. Overall, the 2026 results suggest Orange County's office market is recovering, with improving fundamentals and stronger demand for well-located, higher-quality properties.
However, older buildings and less competitive locations continue to face leasing challenges.
Source: GlobeSt/ALM