At the end of the third quarter, Orange County’s manufacturing and warehouse industrial market remained sluggish.
Although dealing with a slowdown, this sector continues to have low vacancy levels with a rate of 3.9% of its 5,629 properties larger than 10,000 square feet and totaling more than 205 million square feet.
The average asking lease rate remains about the same as the rate seen at the start of 2007, dipping 1 cent to 69 cents per square foot.
Industrial construction remains minimal with only 231,000 square feet in the development phase.
There were nearly 1.6 million square feet of gross lease and user sales recorded in the third quarter, bringing the 2008 total to more than 5.7 million square feet of activity.
The majority of manufacturing and warehouse third-quarter activity occurred in the airport area. This submarket saw 503,391 square feet of absorption, the majority of which can be attributed to several significant leases, such as La Jolla Sport USA Inc., which signed a 10-year lease for 147,000 square feet in Irvine.
However, this submarket also saw the greatest amount of negative absorption in the third quarter. This was the result of several buildings becoming vacant, the majority being smaller than 50,000 square feet.
North Orange County, although steady from the previous quarter, has seen a decline in activity.
A total of 398,235 square feet of gross leases and sales was recorded in the third quarter, which is down from the 556,737 square feet of activity occurring the previous quarter.
The combination of declined demand and more available space becoming vacant resulted in negative 351,954 square feet of absorption and an increased vacancy rate of 3.6%.
OC’s manufacturing and warehouse industrial market is not immune to the economic challenges facing many businesses today. The effects of reduced consumer spending and an increasingly volatile credit market have forced many companies to curtail expansion and relocation plans, choosing instead to consolidate to save costs.
Data and analysis provided by CB Richard Ellis Group Inc.
