Real Estate Watch: West Orange County
Warehouse Buying Highlights West OC Activity
By BRAD BIERBAUM
The West Orange County industrial market remained healthy through the third quarter with a vacancy of 1.5% for manufacturing and warehouse space and 8.3% for research and development space.
Most manufacturing and warehouse activity has been for buildings 50,000 square feet and less.
Sales of manufacturing and warehouse space have been particularly brisk.
Small businesses are taking advantage of historically low interest rates to buy existing warehouse buildings in lieu of renewing leases.
Buildings 10,000-to-20,000 square feet in West OC are selling at the mid-to-high $90 per square foot level.
Meanwhile, leasing activity has slowed as some users buy space while others cite a lack of business confidence for nixing expansion plans. Most available space for lease has been on the market for six months on average.
R & D; activity also has been slow through the first three quarters of the year on weak demand for space in the technology, healthcare and biotech sectors. Average asking lease rates for R & D; space fell four cents to 66 cents a square foot in the third quarter vs. a year ago.
With land prices at record highs and a lack of tenant demand, development in West OC is focused on building-for-sale or built-to-suit projects.
But while West OC faces some challenges, it remains one of the premier locations for Southland companies that need access to the ports of Long Beach and Los Angeles.
Several quarters of strong demand should cut supply, increasing rental rates and initiating new development on the few remaining land parcels available.
In fact, recent activity shows the market has the potential for recovery and growth sooner than later.
Bierbaum is a senior vice president in CB Richard Ellis’ Anaheim office.
