by Calculated Risk on 9/30/2006 04:03:00 PM

From the Orange County Register: Office landlords vulnerable to housing woes

Orange County's office market is one of the most highly exposed markets in the nation to the housing industry, an industry report says.

The county and Las Vegas tie for third among major markets that lease a high percentage of space to housing-related companies, says a study by Grubb & Ellisand PNC Real Estate Finance.

Housing companies accounted for 21 percent of all leasing activity in the county since 2000.

Yet in recent months, the trend shifted, brokers say.

Mortgage companies have vacated more than a million square feet of office space this year amid a drop in demand for home loans, brokers say. A slowing housing market and slightly higher interest rates are to blame, they say.
...
Housing-related companies include homebuilders, sellers of materials such as lumber, mortgage and other real estate finance firms, and professional firms such as architects.

Nationwide, the effect of the housing slowdown on the office market is likely to be modest, Grubb's report says.

The #1 office market with exposure to the housing bust is the Inland Empire!