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Thursday, Mar 28, 2024
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OC’s R & D; market remained very active in the third quarter

The Orange County Research and Development market consists of 1,001 buildings totaling more than 40 million square feet, approximately 17% of the existing industrial space in Orange County. The largest concentration of R & D; space is in the Airport Area and South Orange County, which together have more than 26 million square feet.

Although the majority of the industrial product under construction is M & W; buildings, the R & D; sector looks to add two new buildings, with a 66,000-square-foot building in Garden Grove and a 32,075-square-foot building in San Clemente.

The R & D; market finished the third quarter with more than 1 million square feet of lease and sale activity, bringing the year-to-date total to approximately 3 million square feet. This level of activity is comparable to the first three quarters of 1999, when nearly 3.1 million square feet of R & D; activity was recorded. The majority (62%) of the third-quarter activity took place in South Orange County, while North Orange County and the Airport Area combined to account for the other 38%.

The high level of activity in the first three quarters of 2000 trimmed the amount of available R & D; space in Orange County. The overall availability rate for R & D; space fell to 9.1% this quarter, down 22% from the 11.8% level that was posted one year ago. The vacancy rate for R & D; buildings also fell this quarter, to 3.83%, leaving just 1.5 million square feet vacant throughout the county.

The weighted average asking lease rate for research and development space in Orange County ended the third quarter at 75 cents per square foot per month, down 4 cents from the second quarter. Although the weighted average shows a decline in asking rents, asking lease rates for R & D; space are actually rising in Orange County. As new construction is quickly absorbed, older projects with lower lease rates are increasing in availability, which affects the weight of the average. The average asking sale price of R & D; buildings increased only slightly in the third quarter, to $112.61 per square foot from $112.34 last quarter. The asking prices for research and development space continue to be highest in the Airport Area and South Orange County.

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