Why Orange County CRE Is Poised for a Rebound in 2025
Orange County’s commercial real estate (CRE) market is entering a new phase of stability and strategic opportunity. After several years of volatility, lease rates are leveling off, vacancy rates are plateauing, and investors are regaining confidence.
Three cities — Brea, Irvine, and Santa Ana — are shaping this regional recovery. Each represents a different kind of opportunity for landlords, tenants, and investors looking to optimize holdings in 2025.
- Brea is transforming with retail-driven redevelopment.
- Irvine continues to attract high-credit tenants seeking upgraded flex and Class A office space.
- Santa Ana is becoming Orange County’s urban revitalization story.
Southern California CRE Snapshot (Q2 2025)
KEYZ Insight: Industrial rent growth has cooled while office tenants regain leverage. This balance gives both occupiers and investors room to negotiate smarter, longer-term deals.
Irvine: The Flight-to-Quality Capital of Orange County
Irvine remains the heartbeat of Orange County’s business ecosystem, home to major technology, financial, and medical tenants. With premium office parks like the Irvine Spectrum, the Airport Area, and Discovery Park, the city continues to attract strong corporate demand — but at tenant-friendly rates.
Market Highlights (2025):
- Vacancy: ~17% (JLL Q2 2025)
- Average Asking Rent: $2.77 FS/sf/mo
- Industrial/Flex Rents: $1.62 NNN/sf/mo
- Common Incentives: 1–2 months free rent, 3% annual caps, and $15–25/sf TI packages
Opportunities
- Flight-to-Quality Leases: Upgrade to newer, energy-efficient buildings for the same rent.
- Shorter Lease Terms: Negotiate 3–5 year deals with renewal options.
- ESG Upgrades: Buildings with LEED certifications are leasing 12% faster (CBRE, 2025).
Investment Outlook
Investors targeting Irvine should focus on Class A+ and flex/R&D properties, especially those with energy efficiency or life sciences appeal. Vacancy pressure is softening yields, creating room for value-add acquisitions.
Brea: Redevelopment-Driven Growth and Small-Bay Flex Appeal
Brea’s transformation is accelerating through mixed-use and retail redevelopment. Its position along the 57 Freeway corridor makes it a magnet for retail, industrial, and small professional users.
Brea Mall Redevelopment (Simon Property Group, 2025):
- ~380 new residential units
- Expanded retail lineup (Uniqlo, Alo Yoga, Shake Shack)
- Enhanced open-air dining and pedestrian experience
(Source: ConnectCRE – Brea Mall Redevelopment)
Industrial Context
- Vacancy: 4.1% (CBRE Industrial Figures Q2 2025)
- Net Absorption: –14,000 sf
- Under Construction: 2.4M sf across North OC
Opportunities
- Retail/Service Expansion: Fitness, wellness, and medtail users benefit from new rooftops and retail density.
- Small-Bay Industrial: Renewals and relocations offer 5–10% rate savings.
- Mixed-Use Land Plays: The City of Brea General Plan Update encourages transit-oriented and high-density developments.
Investor Takeaway:
Long-term growth potential lies in adaptive reuse projects and parcels adjacent to Brea Mall’s redevelopment footprint.
Santa Ana: Downtown Activation Meets Creative Office Expansion
Santa Ana’s downtown revival continues to attract tenants priced out of Irvine and Costa Mesa. The city’s investment in mixed-use development, small business grants, and arts-based placemaking has turned it into a cultural and economic hub.
2025 Highlights:
- Downtown foot traffic up 11% YoY (Placer.ai)
- Creative office rents 10–15% below 2019 peaks (CoStar Market Data, 2025)
- Multiple city-led TI and façade grant programs available (City of Santa Ana Economic Development)
Opportunities
- Experiential Retail & Dining: Leverage affordable downtown leases before demand peaks.
- Creative Office Conversions: Repurpose historic structures into high-yield spaces.
- Neighborhood Services: Medical and financial tenants expanding alongside housing growth.
Investor Takeaway:
Invest early in mixed-use or adaptive reuse assets downtown. As residential density rises, Santa Ana’s retail and small-office segments will outperform the broader OC average.
Strategic Recommendations for 2025
For Tenants
- Start renewals 9–12 months early to capture market softness.
- Cap annual escalations at 3% or CPI.
- Request TI packages ($10–$25/sf) and free rent periods during buildout.
- Benchmark against 2022–2025 comps; many rates remain 5–8% lower.
For Landlords & Investors
- Offer spec suites to accelerate lease-up.
- Incorporate energy-efficient upgrades to meet ESG expectations.
- Diversify portfolios with flex, retail-service, and small-bay industrial.
- Target city-backed areas like Brea Core and Santa Ana Downtown for redevelopment upside.
2026 Forecast: Stability and Selective Growth
Sources: CBRE Market Outlook 2025, CoStar Pipeline Report 2025
KEYZ Market View: OC’s submarkets are no longer overheating — they’re maturing. Smart timing, proactive renewals, and selective asset repositioning will define the winners in 2025–2026.
Frequently Asked Questions
What are the best Orange County CRE opportunities in 2025?
Industrial and mixed-use assets in Brea, Class A office/flex in Irvine, and creative retail in Santa Ana offer the best short-to-mid-term upside.
Has industrial rent growth peaked?
Yes. Industrial rents have plateaued at around $1.62 NNN/sf/mo, marking the first cooling phase since 2020 (CBRE Q2 2025).
How are tenants benefiting from current office conditions?
With vacancy at 15.7%, tenants can negotiate stronger TI allowances, capped escalations, and free rent periods.
Is Orange County seeing new CRE construction?
Roughly 2.4M sf of industrial and 900k sf of office are under construction — moderate compared to 2021–2022, creating balance through 2026.
About KEYZ Commercial
At KEYZ Commercial, we combine real-time market intelligence, proprietary lease comps, and decades of deal experience to help Southern California tenants and investors make data-driven real estate decisions.
Our advisory covers industrial, office, retail, and mixed-use across Orange County, Los Angeles, and the Inland Empire.