By RYAN PETERSON
West Orange County’s manufacturing sector finished 2005 with a vacancy rate of 2.7%, the lowest mark since mid-2002.
In fact, West County’s office, retail and manufacturing sectors all posted strong rises in rents and declines in vacancy during the fourth quarter.
Office led the way on the vacancy front with a 36% decline to 7.1%, versus a year earlier. Retail had the largest rent increase with a 12.3% gain to $2.28 per square foot.
All indicators point to another strong start in 2006.
The manufacturing and warehouse sector continues to see rising sale prices, increased leasing activity and limited land supply for future development.
The combination of low vacancy and strong demand will add to supply imbalance and place further upward pressure on pricing.
With long-term interest rates still attractive, the primary focus for companies needing space has been buildings for sale.
The Astronautics Corporate Center in Huntington Beach, which was developed by Burke Real Estate Group, completed construction in the first quarter.
The project consists of five buildings ranging in size from 18,000 to 63,000 square feet. Astronautics Corporate Center was completely sold out before construction was finished,a sign of the strength of the owner and user sale market.
West County benefits from its proximity to the ports of Los Angeles and Long Beach. Tenants and owner-users are willing to pay a premium to remain in OC but also operate within striking distance from the ports.
The supply of class A warehouse space in OC and surrounding submarkets is at historical lows.
In the first quarter, West County saw construction start on the largest new industrial development in more than 15 years.
The Pacific Gateway Business Center in Seal Beach is set to include 10 buildings totaling roughly 830,000 square feet.
The project is being developed by Overton Moore on nearly 45 acres in Seal Beach it bought from Boeing Co. The business center will offer modern industrial buildings from 45,000 to 184,000 square feet. The first phase of the development is expected to be completed in November.
Strong leasing and sale activity, new quality buildings and the OC lifestyle are factors that are expected to contribute to another strong year in 2006.
Peterson is an Associate in the Anaheim office of CB Richard Ellis Group Inc.
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