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Thursday, Mar 28, 2024
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REAL ESTATE WATCH: WEST ORANGE COUNTY

As the end of 2009 approaches, the West County industrial market continues to feel the effects of the recession. With continued rising unemployment and the lack of available capital, real estate values have decreased while landlords have realized filling a vacancy has become more important than achieving a perceived value.

From the second quarter of 2008 to the second quarter of 2009, the average asking lease rate has decreased by 14.1%, from 64 cents per square foot to 55 cents per square foot, while the vacancy rate rose from 5.8% to 7%.

Thankfully, it is not all doom and gloom in West County.

Two of the largest leases in the county have taken place in the last three months.

The 234,763-square-foot Cypress Distribution Center and a 184,000-square-foot building at the Pacific Gateway Business Center in Seal Beach have both secured long-term tenants in a market where leases in this size range are few and far between.

These large deals helped push absorption in West County to 208,042 square feet.

These deals seem to be more of an indication of an immediate need on behalf of both tenants rather than a trend toward recovery and stability.

The available inventory in West County saw a significant increase in buildings 20,000 square feet and smaller, suggesting that entrepreneurs continue to be impacted by the economy.

There is a “survival-of-the-fittest” atmosphere in the market as activity continues to be substantially off in all sectors.

The potential benefit of this is that stable companies can take advantage of reduced lease rates, motivated landlords and a plethora of buildings to choose from.

Young is an associate in the Anaheim office of CB Richard Ellis Group Inc.

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