Like the majority of Orange County, the North and Central submarkets experienced much of the same market trends in the first quarter.
This market includes 3,300 commercial properties totaling nearly 175 million square feet, and, with the exception of the office sector, holds an average vacancy rate of 2.5%.
Construction of new buildings in the submarkets remains minimal with only 808,000 square feet of office, industrial and retail space in the development phase. Demand slowed in the first quarter, as seen in the negative 987,000 square feet of absorption.
The vacancy level for office space in North and Central Orange County increased in the first quarter to 13.5% from 11.8% in the fourth quarter. This decline in occupancy can be partially attributed to 348,387 square feet of negative absorption that occurred in the first quarter.
Although not dramatic, average asking lease rates for available space in these submarkets continues to decrease, dipping a cent from the previous quarter to $2.42 per square foot.
The industrial market, which is made up of 2,496 manufacturing and warehouse buildings and 184 research and development, also experienced slower activity in the first quarter.
There were 508,936 total gross leases and sales recorded this quarter, representing a decline in activity by 63%. The decrease in activity coupled with additional available space coming onto the market led to 544,927 square feet of negatively absorbed space.
This also led to an increased vacancy rate which now stands at 2.4%. Lease rates, however, for both the manufacturing and warehouse and research and development sectors increased to 64 cents and 91 cents per square foot, respectively.
For the 259 retail centers totaling 41.9 million square feet, the vacancy rate ticked up to 3.5%. Current economic conditions have led many retailers to consolidate locations and/or hold off on expansion plans.
There was negative 53,588 square feet of absorption recorded in the first quarter while 439,600 square feet remain in the construction phase.
The average asking lease rate rose from $2.50 in the fourth quarter to $2.57 per square foot.
Data and analysis provided by CB Richard Ellis Group Inc.
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