The North and Central submarkets of Orange County’s commercial market turned in mixed results in the second quarter.
Occupancy levels varied from sector to sector, with decreases in lease rates a common thread.
The North and Central OC segments combine for more than 3,400 commercial properties totaling about 179 million square feet.
Average vacancy rates finished the second quarter below 5% with the exception of the office sector.
New projects are minimal, with 194,000 square feet of office space in the development phase.
There were signs of slow improvements in the second quarter, with a modest increase in demand reflected by 25,801 square feet of positive net absorption. That’s well off the first quarter’s pace but kept the market moving ahead. It has accounted for 719,000 square feet of positive net absorption for all segments combined year-to-date.
The vacancy level for office space in the North and Central OC submarkets declined to 14.8% in the second quarter compared with a year earlier.
The industrial market, which is made up of 2,545 manufacturing and warehousing buildings and 185 research and development properties, saw a decrease in activity in the second quarter.
A total of about 777,000 square feet total in leases and sales marked a 45% drop from the prior quarter. The slower demand, coupled with vacant space that came on the market in the second quarter, led to 227,032 square feet of negative absorption.
The vacancy rate in the industrial segment rose to 3.5% in the second quarter.
The average lease rate in the manufacturing and warehousing sector held steady at 46 cents per square foot in the prior period and registered a two-cent drop from a year earlier. The rate for research and development space fell to 80 cents per square foot, down 12 cents from the prior period and 4 cents compared with a year ago.
North and Central OC combine for 282 retail centers totaling 44.2 million square feet.
The vacancy rate for retail rose to 4.3% in the second quarter, up 4.2% from the prior period and 3.7% a year earlier.
The retail segment recorded 30,370 square feet of negative net absorption recorded in the second quarter, and no new centers are in the construction phase.
The average asking lease rate rose despite those indicators, reaching $2.19 in the second quarter, up 7 cents from the prior period. That still trailed the rate a year earlier by 5 cents.
Analysis provided by CBRE Research.
