Dec. 15--For several years, the 19-story tower beside the 405 freeway became known as the "see-through building."
That's because at least 40 percent of the glass-sided skyscraper sat empty -- due in part to the collapse of its principal tenant, subprime lending giant New Century Financial. So you could see right through the building as you whizzed by on the freeway.
Now, the skyscraper is known by its more dignified name: The Michelson building. And it's no longer see-through.
All but four of the building's offices -- 96 percent of its floor space -- are rented out. The 536,000-square-foot building's sticker price almost doubled from 2009 (when its developer sold it for $73 million loss) to 2012 (when a new owner resold it for a $124 million gain).
The Michelson's recovery epitomizes the recovering fortunes of commercial real estate throughout Orange County. Devastated during the recession, the market for offices, shopping centers, factories and warehouses is slowly bouncing back.
Many offices and storefronts are filling up again. Rents have stopped dropping and, in some properties, are going up. Construction, which all but halted during the recession, has revived a bit.
More than 93 percent of offices, factories, warehouses and shopping centers were occupied in the third quarter, according to figures from Newport Beach-based broker Voit Real Estate Services.
Unlike the wildly resurgent housing market, however, commercial properties aren't seeing a mercurial rebound.
"It's been a slow crawl out," said Jerry Holdner, Voit's vice president of market research. "Every quarter, it gets a little better."
For example, reports from local commercial brokers show:
-- About 18 percent of Orange County's offices were empty at the height of the recession, according to broker CBRE. Vacancies had fallen to 12.2 percent of all offices, as of the third quarter of this year.
-- Orange County landlords have seen available office space dwindle steadily for 3 1/2 years, with tenants occupying 5 million to 6 million square feet of empty office space since 2010, according to Voit and CBRE. Tenants filled more than 1 million square feet of vacant office space this year alone.
-- Available space in shopping centers fell by 1.2 million square feet since 2011 -- 543,000 of that this year alone, according to Voit. Retail vacancy rates are down slightly, falling from a high of 5.9 percent in mid-2012 to 5.5 percent in the third quarter of 2013.
-- Vacancies for industrial properties fell from a high of 4.9 percent in late 2009 to 3 percent in the latest quarter.
Orange County's industrial properties had the nation's second-lowest vacancy rate, due mainly to Orange County's proximity to the Port of Long Beach, according to CBRE. Los Angeles County was the only metro with a lower vacancy rate at 2 percent.
A long way to go
In all, Orange County has almost 600 million square feet of office, retail, manufacturing and warehouse space in more than 28,000 buildings, according to commercial data firm CoStar Group. That's enough to house almost 6,000 Home Depots -- or more than 200 South Coast Plazas.