The office market in Orange County, California is struggling to recoup losses from the recession. As the market remains sluggish, many properties are still left over-assessed for property tax purposes.
Office leasing is nearly 20% lower than the long-term historical market average for Orange County, according to a recent report by Studley Inc. Leasing volume declined to 7.1 million square feet (sf) in 2013, down from 9.1 million sf in 2011 and 7.6 million sf in 2012.
Tenants seeking large, contiguous blocks of office space are finding their options limited, particularly in some submarkets. As a result, an increasing number of major tenants are opting for renewals or even considering non-traditional office space.
A lack of new construction has contributed to the decline in available space. Nearly all new office projects underway are build-to-suit or medical offices.
Developers remain cautious because the region is still lagging most major metros in terms of office-using employment.
The challenges that owners and developers face in this tough market are important factors that may help lower tax assessments.
Most companies cannot afford to miss an opportunity to reduce their tax bill. As long as the Orange County office market remains stagnant, all avenues to lower tax assessments should be aggressively pursued.