As the county moved into a new century, the Orange County industrial market saw an impressive expansion to a portfolio just shy of a quarter-billion square feet. Total industrial sale and leasing activity were at the highest level of the past decade. More than 20.4 million square feet were transacted, a 20% increase from 1998. Despite a diminishing supply of buildable, entitled land, approximately 6.3 million square feet were delivered in 1999 and more than 2.3 million square feet were under construction at the end of the fourth quarter. Industrial vacancy decreased to 3.43% and availability rates declined to 6.86%. For the year, more than 5.2 million square feet of positive net absorption was experienced, approximately a quarter of that in the fourth quarter. Over the year, the average asking lease rate for industrial space appreciated 6.25% to 68 cents per square foot.
Availability Rates
Driven by 4.9 million square feet of sale and lease activity in the fourth quarter, the industrial vacancy rate in Orange County declined to 3.43% from 3.55% in the third quarter. Despite more than 1 million square feet of new construction completions entering the market, the industrial availability rate continued to drop, to 6.86% from 7.65% in the third quarter. In the fourth quarter of 1998, industrial availability was about 7.22%.
Net Absorption
Enhanced by the record-setting 20.4 million square feet of activity in 1999, Orange County experienced 5,215,666 square feet of positive net absorption. Approximately a quarter of the year’s total, 1.3 million square feet, was experienced in the fourth quarter. More than a third of the quarter’s gross activity and net absorption occurred in North Orange County, while more than half of the net absorption and a third of the gross activity occurred in the Airport Area.
Average Asking Lease Rates
Average asking lease rates for all industrial space (M & W; and R & D; combined) appreciated 4 cents in the past year, to 68 cents. Over the past 12 months, average asking lease rates for M & W; space fluctuated between 59 cents and 61 cents, then settled at 59 cents for the fourth quarter. Average asking lease rates for R & D; space increased 8 cents to 88 cents from the fourth quarter of 1998.
Construction
Despite a diminishing supply of buildable, entitled land, 6,297,172 million square feet were built in 1999. Approximately 41% (2.6 million square feet) was built in North OC, mostly M & W; space. South County accounted for 28%, and the Airport Area pitched in 22% of the total, the balance of 8% was built in West County. At the end of the fourth quarter, 2.4 million square feet were under construction. Another 3.5 million is planned and scheduled for completion in 2000.
