INDUSTRIAL MARKET
Vacancy Rate Rises, Absorption Declines, Lease Rates are Flat
Vacancy
The availability rate for industrial space has been creeping upward steadily since hitting a low of 5.7% in the fourth quarter of 2000.
The increase mirrors job losses in Orange County’s industrial sector.
But as the loss of industrial jobs narrowed in the second quarter, the overall availability rate stabilized at 8.3%.
Still, as tenants continued to move out of spaces put on the market for lease or sale, the vacancy rate increased to 5%,up from 4.7% the previous quarter.
Although most of the job losses are manufacturing workers, the vacancy rate for manufacturing and warehouse space only rose to 4.5% by the end of the second quarter.
Absorption
Gross sale and leasing activity increased in the second quarter to 3.4 million square feet, due to continued demand among smaller tenants and a boost in large-tenant activity.
There were 20 sale and lease deals for space greater than 50,000 square feet during the second quarter, versus eight deals in the previous quarter.
The increase in activity was concentrated in the manufacturing and warehouse sector. Although still negative in the second quarter at minus 601,283 square feet, net absorption improved versus the negative 762,000 square feet absorbed the previous quarter.
Lease Rates
The average asking lease rate for industrial space was flat in the second quarter at 58 cents per square foot,the same rate as the previous quarter and a year ago.
The average asking sale price rose 1.1% in the second quarter to $89.15 per square foot.
Construction
Nine industrial buildings totaling 307,251 square feet completed construction during the second quarter, 63% of which had been leased or sold by the close of the period.
The completions were all in North County. They included one research and development building in Orange, three manufacturing and warehouse buildings at the Fullerton Business Park and five at the Voit Brea Business Park.
Six new buildings in North County started construction during the second quarter. There is 866,613 square feet of development under way.
The five new buildings in Buena Park Santa Ana,totaling 463,273 square feet,are expected to be finished by the end of the year.
Analysis provided by CB Richard Ellis’ information management department.
