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Vacancy <br />> Direct vacancy for the quarter was 12.4%, while sublease Historical Vacancy v. Rents I O.C. Office Market 03'75-'19 <br />vacancy recorded at 1.1%. <br />> Tenants looking for Class A space greater than 100,000 <br />square feet have more options given new office construction <br />deliveries. <br />> The North County submarket held the tightest vacancy in <br />the market at 8.0%. <br />> FORECAST: Vacancy is expected to remain steady as new <br />office product comes online at year-end. <br />Absorption and Leasing Activity <br />> Net absorption recorded positive but essentially Flat at <br />91,100 square feet. Absorption in all submarkets recorded <br />Rat movement while much of the positive movement stemmed <br />from the Airport Area (56,400 square feet) and West County <br />(69,000 square feet) submarkets. <br />> Large tenant move -ins during the third quarter included: <br />Ready at Dawn (42,100 square feet), Alorica, Inc (31,700 <br />square feet) and CMG (25,100 square feet) moving into <br />the UCI Research Park in Irvine; Viant (47,700 square feet) <br />subleasing at 2722 Michelson Drive in Irvine. <br />> Leasing activity decreased from last quarter's 1.6 million <br />square feet to 1.5 million, falling below the five-year historical <br />average of 1.7 million square feet. <br />> FORECAST: Absorption gains are expected to be limited <br />in the coming quarters as newly built office buildings deliver <br />to the market and tenants continue to make space efficient <br />decisions. <br />Rental Rates <br />> Direct asking rental rates remained the same from last <br />quarter at $2.95 PSF FSG. Much of this weight from overall <br />rates staying the same from last quarter is due to Class A <br />product, recording a decrease of $0.03. <br />> Class A rental rates decreased by $0.03 to $3.23 PSF <br />FSG, while Class B increased by $0.01 to $2.71 and Class C <br />increased by $0.04 to $1.98. <br />> FORECAST: Overall asking rates for all building classes <br />are expected to stabilize through the end of the year as the <br />development of new inventory slows. <br />$3.20 <br />$3.00 <br />$2.80 <br />LL <br />jS $2.60 <br />$2.00 <br />$1.80 <br />.rgENiS VI Na <br />3075 3016 3077 3018 3019 <br />16% <br />14% <br />12% <br />10% <br />c <br />8% <br />S <br />6% <br />4% <br />2% <br />0% <br />Net Absorption by Submarket I O.C. Office Market Q3 '15-19 <br />1.500.000 <br />1,000,000 <br />w <br />w 500,000 <br />n 0 <br />(50Q000) <br />(1,000.000) <br />0Ne re RMM •wNsm,cmxmua,c�rars <br />3015 3016 <br />3017 3018 3019 <br />Historical Leasing Activity I O.C. Office Market Q3 '15-'19 <br />2,400.000 <br />2.200,w0 <br />2=,O <br />LL 11800,000 <br />f/J <br />1.600.000 <br />1.400,000 <br />1200;000 <br />1,000,000 <br />3015 3016 3017 M18 M19 <br />2 <br />