By MARK FRIEND
As the fourth quarter came to a close, lease rates continued to increase and vacancy rates remained stable across north and central Orange County.
Combined, the north and central Orange County markets consist of nearly 3,300 office, retail and industrial properties totaling 169.3 million square feet. Vacancy levels remain in the single digits for all property types, with the research and development industrial space seeing the lowest vacancy levels of 0.7%. Retail space has a slightly higher vacancy rate at 1%, as well as manufacturing and warehouse at 2.1%. Vacancy rates for the area’s office space experienced a minimal increase in vacancy and are still holding a healthy rate of 7.5%.
Average asking lease rates also have continued to rise with office space in north Orange County climbing 9 cents during the past three months to $2.07 per square foot. Industrial properties also saw a rise in rates with manufacturing and warehouse space asking an average 59 cents per square foot, and research and development space going for an average 79 cents per square foot,a slight dip from the third quarter. The average asking lease rate for retail space recovered after dipping slightly in the third quarter to $2.46, triple net.
Due to lack of available vacant land, north and central Orange County is referred to as an “in-fill market” and redevelopment of existing buildings account for the majority of new construction in these submarkets. Currently, there is more than 2 million square feet of commercial properties in the construction phase. The majority of this development is retail space such as The District in Tustin and Anaheim GardenWalk, which are set to finish by late this year and mid-2008.
Expansion of the industrial market remains active with 128,589 square feet of manufacturing and warehouse space under construction, while there has yet to be any new office or research and development space to break ground in the area.
This year should be another healthy year for commercial real estate in north and central Orange County with continued demand, employment growth and higher rental rates and sales prices as product becomes more and more scarce.
Friend is a senior vice president in the Anaheim office of CB Richard Ellis Group Inc.
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