The manufacturing and warehouse vacancy rate steadily decreased throughout the first three quarters of 2013, dropping in the third quarter to 2.8% from 3.4% a year earlier.
The North Orange County submarket continued to hold the lowest vacancy rate, 2.2%, followed by the Greater Airport Area, with a 2.9% rate. South Orange County and West OC ended the quarter with rates of 3.1% and 4.2%, respectively.
The Orange County manufacturing and warehouse sector consists of 5,692 buildings totaling more than 209 million square feet.
The decrease in vacancy, combined with nearly 2.4 million square feet of gross activity, resulted in positive absorption of 503,828 square feet at the end of the quarter.
North Orange County posted the most net absorption, with 291,458 square feet. West Orange County followed closely, recording 226,754 square feet. South Orange County was the only submarket to record negative absorption, ending the quarter with -62,084 square feet.
Average asking lease rates remained relatively flat throughout 2013. The third quarter ended at 58 cents per square foot, triple-net, the same as the second quarter. But the average asking lease rate for manufacturing and warehouse space was up 2 cents year-over-year.
Overall, lease rates are expected to increase over the next 12 months.
Commercial development in the Orange County region is slowly making a comeback. All current development in the industrial sector is manufacturing and warehouse space in the North Orange County submarket.
The current square footage under construction totaled just more than 1 million square feet at the end of the third quarter. Speculative development remained in the pipeline, and we should see more development this year.
Data and analysis provided by CBRE Research.
