By ROSS BOURNE
The airport area manufacturing and warehouse leasing market experienced lower demands and increasing vacancy levels in the third quarter. Average asking lease rates were at 79 cents triple net for the second consecutive quarter, an increase of more than 15% from third quarter 2006.
Vacancy rates increased slightly to 3.5% compared to 3.3% for the second quarter. Gross absorption decreased to 324,329 square feet compared to 533,452 square feet for the second quarter and 1.12 million square feet in third quarter 2006.
Although the airport area saw a small decline in demand in the third quarter, the limited supply of available buildings will be the driving factor behind the competition among tenants in this marketplace.
During the third quarter, there were three large lease transactions in the airport area and all three within a mile of each other. Kyocera Tycom Corp. leased 59,487 square feet at 3565 Cadillac Ave., moving its corporate headquarters from Irvine to Costa Mesa. Showroom Services LLC subleased 53,581 square feet at 1683 Sunflower Ave. from Nissan North America and EIK Inc. leased 43,526 square feet at 1670 Sunflower Ave., both in Costa Mesa.
Sale activity in the third quarter was strong as money continued to be invested into the airport area industrial market. There were 10 sales totaling more than 900,000 square feet of industrial space. A majority of that space was bought by Greenlaw Partners,366,629 square feet,at 2001-2007 E. Dyer Road in Santa Ana and Kusha Inc., which bought the 120,475-square-foot facility at 2152 Alton Parkway from Guthrie Development Co.
With almost no construction of industrial buildings and vacancy rates close to their all-time lows, the airport area industrial market should continue to see upward pressure on lease rates. Gross absorption will continue to be a challenge, not because of a lack of demand, but because there are not enough quality buildings to lease or buy in a given submarket like the airport area. We anticipate a slight decreasing trend in demand while lease rates should stabilize through the fourth quarter and into the first of the year.
Bourne is an associate in the Newport Beach office of CB Richard Ellis Group Inc.
The Real Estate Watch Chart – Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
CLICK HERE
to download
REAL ESTATE WATCH CHARTS
Please note: to download the file, you will need Adobe Acrobat Reader installed on your computer. For a free copy of the software,
click here.
