The greater John Wayne Airport area saw a mixed recovery in the second quarter.
Lease rates still have continued to decline across the county, but not as aggressively in the greater airport area as in the rest of Orange County. In the second quarter, airport area industrial space saw a 2.4% decrease to 64 cents per square foot from the first quarter, and a 15.5% decrease from a year earlier.
In today’s market, tenants are receiving attractive lease packages and locking in low lease rates for longer terms.
But few deals have pushed up industrial vacancy levels by 0.2% from the first quarter. Vacancy in the airport area increased slightly, up to 4.6%.
The entire OC market has 11.1 million square feet of vacant space, bringing the average industrial vacancy to 4.4%.
Current market conditions have created opportunities for buyers and tenants.
Sales in the greater airport area have stayed consistent with 164,793 square feet of industrial space sold in the second quarter.
A significant uptick of user sales has been occurring recently in all of OC. Industrial building values are off 35% to 45% from their peak and many tenants are becoming first-time building owners.
Conventional financing still is difficult. Most buyers either are using Small Business Administration loans or paying cash. SBA financing has been readily available and current rates are at record lows.
Representing almost a third of OC’s total industrial space, the greater airport area consists of 2,018 industrial buildings totaling 69 million square feet.
The airport area is more than double the size of the South County market with 32.5 million square feet of industrial space.
Cole is an associate in the Newport Beach office of CB Richard Ellis.
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