Representing about 17% of Orange County’s industrial square foot base, the research and development sector totals 1,081 buildings and accounts for about 42 million square feet of space.
The majority of the county’s R&D space is in the greater John Wayne Airport area and South Orange County submarkets, which combine to account for 27.8 million square feet, or more than 65% of the total market space.
North Orange County is the third largest R&D submarket with 9.6 million square feet of space. West Orange County has nearly 4.9 million square feet, the smallest of the submarkets.
The R&D sector saw 437,510 square feet of gross absorption in the third quarter, up from the 229,026 square feet of gross activity a year earlier.
Net absorption also was up from the previous year though largely flat from the third quarter at 42,408 square feet. As a result, vacancy rates dipped slightly in the fourth quarter to 4.5% from the prior quarter’s 4.6%.
The fourth quarter vacancy rate still was about 7% higher than the 4.2% level seen a year earlier.
The overall availability rate declined in the fourth quarter to 9.4%, down from 9.8% in the third quarter.
Following a decline in the third quarter, the average asking lease rate for R&D space shed an additional five cents in the fourth quarter to 81 cents per square foot.
This brings the average asking rent far below the 90 cents per square foot average seen a year earlier. The fourth quarter’s average ranges from a low of 73 cents per square foot in West County to 90 cents per square foot in South County.
No R&D buildings are under construction in the county. Developers have halted plans for development until a stronger market is seen, forcing tenants to look to existing buildings that offer a strategic advantage to facilitate growth in the coming years.
Data and analysis provided by CB Richard Ellis Global Research and Consulting.
The Real Estate Watch Chart
Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
