• Q4 net absorption turned positive for the first time in 2025 as corporations strengthened office attendance mandates—occupancy was relatively flat for the year in Irvine. • Large occupier commitments and a diversified leasing base contributed to stable leasing demand. • Asking rents were stable amid limited new supply, while flight-to-quality trends persisted with Class A properties outperforming the broader market. • The market is projected to tighten as conversions continue, and new development remains constrained. Orange County (Irvine) Office market trends Sharp positive absorption in Q4 led to net gains in occupancy for Irvine for the first time since 2019, causing vacancy to decrease from 18.8% to 18.0% over the course of the year. The largest move-in was Hyundai, which occupied 133,745 s.f. at 2300 Main, a lease the company signed in the summer. Asking rents increased 0.8% year-over-year, slightly underperforming the broader market as high-end spaces have seen more aggressive leasing demand in recent quarters. Class A buildings commanded a 7.4% rent premium over Class B buildings, highlighting ongoing flight-to-quality among larger tenants. Q4 leasing activity was spread out across industries, reflecting Orange County's diversified economy. In one of the largest leases made during the quarter, TGS Management, a financial services company, renewed 114,875 s.f. at 17500 Laguna Canyon. Rent momentum has been relatively weaker in Irvine with a lack of new development in recent years: larger Class A leases signed in 2025 averaged rental rates in the low-to-mid $40s on a full-service gross basis. Orange County and Irvine have broadly maintained lower vacancy rates than the nation overall throughout the pandemic, with vacancy peaking below 20%. As new development now grinds to a halt, expansionary demand will be forced to target broader Class A options. With the largest availability of Class A supply being located in Irvine, relocation pressures are expected to grow in 2026. Over the course of 2025, Class A availability already declined by roughly 300,000 s.f. Outlook Orange County’s continued recovery will be supported by a lack of new construction, ongoing conversion activity, and sustained return-to-office momentum. Limited new supply is evident as OC Vibe remains the only significant ongoing office development, located in the Stadium Area submarket roughly 5 miles north of Irvine. Office conversions continue to drive a negative inventory environment, with several office buildings being repurposed for residential, medical or industrial uses. This could potentially reduce office inventory by more than 5%, narrowing office options for tenants universally across Orange County and consolidating occupancy in remaining Class A assets. MUST's Submarkets Overall market statistics Forecast 2025 net absorption (s.f.) -594,901 Under construction (s.f.) 168,137 Total vacancy (%) 17.0% Sublease vacancy (s.f.) 1,694,696 Asking rent (US$ p.s.f.) US$34.92 Concessions Stable Net Absorption and Overall Vacancy Rates Gross Leasing Activity Rental Rates and Going-in Yields CBD Class A cap rate (%) Cap rate Asking rent 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 9% 8% 7% 6% 5% 4% 3% 25% 20% 15% 10% 5% 0% $45 $40 $35 $30 $25 $20 2010 2014 2018 2012 2016 2020 2022 2024 Irvine Rest of Market 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 3.0M 3.2M 3.5M 3.4M 2.8M 2.3M 2.5M 2.4M 1.7M 2.6M 2.0M 3.4M 3.2M 3.3M 2.2M 2.5M 1.9M 2.3M 2.8M 2.8M 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Net absorption (m.s.f.) Total vacancy (%) / 43 / MANULIFE US REIT
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