The Mid-Counties Market is defined as the cities along the border of Orange and Los Angeles counties. As the first half of this year came to a close, the market indicators in the Mid-Counties remained positive as vacancies fell and asking rents rose in the second quarter.
The Office Market
The vacancy rate in the Mid-Counties office market has been on a steady decline since the third quarter of 1999. Office vacancy ended the second quarter at a rate of 12.74%, down from 14.95% in the first quarter. Absorption in the Mid-Counties office market totaled 120,352 square feet in the second quarter, bringing the year-to-date total to 329,976 square feet of positive net absorption.
Construction activity picked up a bit during the second quarter as ground was broken on a new four-story, 106,000-square-foot building in Cerritos.
The average asking lease rate for office space in the Mid-Counties, which has fluctuated between $1.60 and $1.63 per square foot per month over the past two years, rose sharply to $1.72 in the second quarter. Seal Beach, in the Orange County portion of the market, had the highest average asking lease rate at $2.35 per square foot, 36% higher than the average asking rent for the market. Other cities with average asking rents surpassing the submarket average included La Palma ($1.89), Artesia ($1.88), Cerritos ($1.81) and Cypress ($1.74).
The Industrial Market
Industrial vacancy dropped during the second quarter in the Mid-Counties to 5.32%, down from 5.51% in the first quarter. The declining vacancy in the first half of this year was fueled by gross activity of approximately 4.9 million square feet, more than half of which was leased or sold during the second quarter.
As availability rates declined, high demand pushed the average asking net lease rates for industrial space to 52 cents per square foot in the second quarter of this year, up from 49 cents in the first quarter. In the second quarter of 1999, the average asking rent stood at just 42 cents.
