Real Estate Watch: John Wayne Airport
Area Looks to Come Back from Telecom Hit
By LAURENCE W. SCHULER
Can you remember when something has had such a profound effect on the manufacturing and warehouse sector as the telecommunications and data center craze of a few years ago?
When the telecommunications buildout hit, the race was on to grab space.
Standard manufacturing and warehouse buildings of 50,000 square feet or larger were being leased or sold at a pace unseen in recent times.
As each deal was made, the bar for rent and term was raised.
Where at one time manufacturing and warehouse space was going for 45 cents per square foot to 65 cents per square foot, the market turned into one where buildings were worth as much as $2 per square foot.
Everyone who could was caught up in the telecommunications and data center mania.
Then, without notice, the game stopped.
Buildings that looked like a ghost town were left in the wake of the telecommunications downturn.
The John Wayne Airport area has seven buildings with about 1.3 million square feet of available space that were intended to be for the telecommunications and data center market.
Much of this space has been available for 12 to 18 months or longer. In fact, the John Wayne Airport area has only seen nine lease or sale transactions greater than 50,000 square feet in the past 12 months.
While some buildings have recovered with new tenants, many still sit vacant.
With the hope of a recovering economy, there is optimism that the affects of the telecommunications pullback will be muted as new tenants take space in the near future.
While the boom-and-bust telecommunications market has left its impression on the overall real estate sector, the economy’s performance has had a substantial impact on activity, too.
The greater John Wayne Airport area has 20 manufacturing and warehouse buildings 50,000 square feet or bigger available,15 are vacant.
On a positive note, only one new manufacturing and warehouse facility (81,700 square feet) has come to the market this past quarter while two buildings,54,500 square feet and 123,700 square feet,were absorbed.
Schuler is a first vice president in the Newport Beach office of CB Richard Ellis.
