Orange County’s industrial market continued to feel the ripple effect of a slowing economy through the third quarter.
The rise of availability seen in the second quarter, coupled with the continued economic downturn, has given way to a rise in vacancy, negative absorption and a de-crease in rental rates.
The airport area’s industrial overall average asking lease rate decreased during the quarter to 84 cents triple net, down about 6 cents from the previous quarter. The overall vacancy climbed to 3.9%, up from 2.4%, and the availability rate increased to 7.3%.
The rise in vacancy is largely due to buildings,10,000 square feet to 50,000 square feet,being on the market for extended periods of time.
The airport area saw negative absorption of more than 1 million square feet, the worst absorption since the fourth quarter of 2001.
Interestingly, gross activity remained relatively stable at 676,753 square feet, but the rise in vacant space, combined with a significant number of tenants opting to renew existing leases, resulted in the dramatic decline in absorption. There was only one transaction larger than 50,000 square feet completed during the third quarter.
The largest industrial lease during the third quarter in the airport area was the 52,840-square-foot Mitsubishi Materials Corp.’s build-to-suit in Fountain Valley. Other notable transactions included Anajet Inc.’s 42,400-square-foot lease in Costa Mesa.
Overall, while not immune to the downtrend, the OC industrial market remains insulated by a tight supply and the entrepreneurial nature of its business environment.
Bolt is a first vice president in the New- port Beach office of CB Richard Ellis Group Inc.
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