THE MID-COUNTIES MARKET
The Mid-Counties market consists of the cities along the border of Orange and Los Angeles counties.
Office Market
Driven by the migration of several solid tenants into the area, the Mid-Counties office market experienced positive net absorption of 118,283 square feet during the fourth quarter. This is an improvement of 112,139 square feet over the third quarter’s negative absorption of 93,586 square feet.
The positive absorption in the last quarter of 1999 dropped the Mid-Counties office vacancy rate to 23.28% from 23.71% in the third quarter. Buena Park and Santa Fe Springs led the decline, both with an approximate 3% decrease in vacancy for the quarter. Class A office space vacancies, which accounted for 26% of the total vacant office space, decreased to 19.18% from 19.60% at the end of the third quarter.
The average asking full-service-gross lease rate for vacant space in the Mid-Counties office market rose 2 cents in the fourth quarter to $1.63 per square foot. The fourth-quarter average is an increase of a penny from the final quarter of 1998. Fourth-quarter lease rates ranged from a high of $1.93 per square foot in La Palma to a low of $1.38 per square foot in Downey.
A pair of low-rise office buildings at Heritage Springs in Santa Fe Springs has broken ground and is scheduled for mid-year 2000 completion. Combined, they will add 42,636 square feet to the Mid-Counties office base. An additional pair of buildings is planned in the same project and are expected to break ground this year.
Industrial Market
Fourth-quarter industrial sale and lease activity in the Mid-Counties market rose to 2.8 million square feet from 2.7 million square feet in the third quarter. Vacancy dropped in the fourth quarter to 3.1%, from 4.1% in the third quarter. Net absorption surpassed the original prediction of 1.5 million square feet for the quarter, reaching 1.8 million square feet. For the year, absorption totaled 3.9 million square feet.
The continued drop in vacancy and continuing demand for space are pushing sale and lease prices upward. Both gross and net lease rates increased 3 cents in the fourth quarter. The average asking net lease rate for buildings larger than 10,000 square feet increased to 47 cents this quarter from 44 cents in the third quarter. Gross lease rates rose to 53 cents from 50 cents in the third quarter.
