Lack of supply in Orange County’s industrial market continues to be a factor as demand increases.
The health of the market, however, is heading in the right direction, with a sales market that’s heating up and a leasing market that is finally gaining traction.
In the Greater Airport Area, for example, sale prices are up 25% since the end of 2012.
Lease Rates Up
Orange County lease rates were up 5% in the second quarter after a quarter of no growth. Off-market deals are becoming a must as the demand continues to grow without new available product.
There was also an increase in demand for class A space, causing a major shift of velocity toward the Irvine Spectrum submarket. That helped cause a 6% increase in average asking sale prices in the South Orange County area since the first quarter.
The vacancy rate remained stable, at 3.2%, up from 3.1% from the first quarter.
Transactions of Note
There were several notable transactions in North Orange County, including Glenair Inc. leasing 205,887 square feet in Anaheim, Cargill Inc. leasing 184,413 square feet in Fullerton, and Shopoff Group purchasing a 152,000-square-foot building in Anaheim.
The big-box deals helped bring about yet another quarter of positive net absorption, amounting to about 432,000 square feet, a slight decrease of roughly 350,000 square feet from the first quarter.
The quarter’s availability rate was 6.1%, continuing the trend of stabilization around the 6% mark. The trend is expected to continue for the next five years, keeping the rate hovering at slightly more than 6%.
North Orange County experienced another strong quarter, with 1.7 million square feet of gross activity, up from 1.1 million square feet in the first quarter. It now has an availability rate of 4.6%, dropping from 4.7% in the first quarter.
Build-to-Suit
The quarter marked the completion of an 83,078-square-foot project in Brea, as well as a 198,414-square-foot, build-to-suit building for CVS in La Habra.
All current construction is in the North Orange County submarket. Several projects are in the pipeline and should gain traction in the next one to two years.
Analysis provided by CBRE Research.
