Cautious optimism behind Orange County's office debt market

Key Highlights

• Orange County (OC) has nearly $1 billion in maturing office loans over the next decade. 
• Alongside these upcoming maturities, the lending landscape for office properties is improving with increased lender interest for office space. This shift is driven by decreasing interest rates as the Fed funds interest rate dropped 50 basis points year-over-year from 5.3% in October 2023 to 4.8% in October 2024.
• The total CMBS maturities from 2025-2035 amount to $915 million, encompassing 48 maturing CMBS office loans, and totaling 3.7 million sq. ft. of space.
• The maturity balances in Orange County are heavily concentrated in the Greater Airport Area (GAA) and South Orange County (South OC). Of the county’s office buildings with CMBS loans, the two submarkets account for 80% of the total maturing debt but only account for 3% of the office inventory.
• The post-pandemic workplace requirements are still being developed as companies look for data on workplace efficiency in the office versus at home.