By CHIP WRIGHT
In the second quarter, a slowing economy continued to create a cautious business environment that affected leases in the greater airport area industrial market.
While the overall average asking lease rate increased during the quarter to 90 cents triple net, up approximately 4 cents from the previous quarter, the overall vacancy has remained flat compared to the first quarter and the availability rate increased from 6.4% to 6.9%.
Compared to a year earlier, the vacancy rate has declined from 2.8% (a 33% decline) while the availability rate has increased by 47% from 4.7% in the second quarter of 2007. The rapid rise in the availability rate should lead to higher vacancy rates.
The second quarter also saw negative net absorption of 146,247 square feet. The decrease in net absorption can be attributed to an overall decline in the number of large deals that occurred during the quarter as well as an influx of industrial buildings coming on the market.
There were only two leases larger than 50,000 square feet completed during the quarter. Gross absorption declined by 39% during the quarter from 922,000 square feet during the first quarter to 656,000 square feet during the second.
The largest lease during the second quarter in the airport area was the 84,000-square-foot Menlo Logistics Inc. renewal at 2900 McCabe in Irvine. Other notable leases included the expansion and relocation of Wahlco Inc. into 66,302 square feet at 2722
S. Fairview Road in Santa Ana, and Pyramid Global Solutions, which leased 46,417 square feet at 1039 Fourth St. in Santa Ana.
Overall, the slumping economy continues to impact the real estate decisions for many companies while landlords look to retain tenants and hold rents steady.
Wright is a senior vice president in the
Newport Beach office of CB Richard Ellis.
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