At the end of the second quarter, Orange County’s manufacturing and warehouse industrial market started to shows signs of slowing.
Despite the slowdown, the market, which has 5,621 buildings larger than 10,000 square feet for a total of more than 205 million square feet, continues to see low vacancy levels of 3.1%.
Although it dipped 2 cents from the first quarter to 69 cents per square foot, the av-erage asking lease rate remains unchanged from the rent posted in the second quarter of last year.
Industrial construction remains low, with only 245,000 square feet in the development phase.
There was nearly 2.1 million square feet of gross lease and user sales recorded in the second quarter, bringing the 2008 total to more than 4.1 million square feet of gross activity.
The majority of manufacturing and warehouse activity in the second quarter happened in West County. This submarket saw 622,638 square feet of gross activity, the majority of which came from three significant sales at the Pacific Gateway Center in Seal Beach. These sales made up about 73%, or 240,000 square feet, of the recorded West County user sale activity.
This activity also contributed to the 436,145 square feet of positive absorption for the quarter, pushing the vacancy rate down from 5.4% in the first quarter to 4.1%.
North County, although steady compared to the first quarter, has seen a year-over-year decline in activity. A total of 556,737 square feet of leases and sales was recorded in the second quarter, which is up only slightly from the 508,936 square feet of activity in the first quarter.
Less demand and more available space resulted in 711,175 square feet of negative absorption and an increased vacancy rate of 3.3%.
OC’s industrial market is not immune to the economic challenges facing many businesses today. Tenants are taking a “wait and see” approach and opting for short-term lease renewals over relocations or expansions during this uncertain time.
Data and analysis provided by CB Richard Ellis Group Inc
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