Lease activity in Orange County’s manufacturing and warehouse sector was strong in the fourth quarter.
Gross lease and sale activity totaled 3.7 million square feet in the fourth quarter, up 174,741 square feet from the previous year. Lease activity was 11% higher to 2.5 million square feet, compared to a year ago.
Sale activity, however, decreased by 8.5% to 1.2 million square feet. The manufacturing and warehouse sector accounts for about 83% of OC’s total industrial square feet.
The vacancy rate declined in the quarter as demand for properties in OC continued to be solid. The vacancy rate for manufacturing and warehouse space was 3.9% at the end of the quarter, down from 4.4% last year. A total of 7.9 million square feet of manufacturing and warehouse space is vacant in OC.
The average asking lease rate was 55 cents per square foot in the fourth quarter, up 2 cents versus a year earlier.
Meanwhile, the average asking sale price for manufacturing and warehouse space increased 17.4% to $112.75 per square foot. While lease prices have fluctuated slightly in the past few quarters, sale prices have been increasing steadily.
There is 567,625 square feet of manufacturing and warehouse space under construction, down 26% from a year ago.
Construction on West County’s Astronautics Corporate Center was under way in the fourth quarter. This project is expected to add more than 100,000 square feet of manufacturing and warehouse space when it’s completed in the second quarter.
There was 782,697 square feet of manufacturing and warehouse space in the planning stage at the end of the fourth quarter.
The manufacturing and warehouse sector saw 1.1 million square feet of positive net absorption in the fourth quarter. While West County was the sole area that posted negative net absorption,79,483 square feet,the rest of OC reported positive net absorption.
North County dominated the region with net absorption of 847,934 square feet, versus a year earlier.
Overall, activity for OC’s manufacturing and warehouse sector was strong in the fourth quarter.
With the availability rate dropping 8% to 6.4% in the period, and vacancy also falling, OC’s manufacturing and warehouse sector is poised for more gains.
Analysis provided by CB Richard Ellis Group Inc.’s Information Management Department.
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