By JOHN MARCHIORLATTI
The research and development market for space 10,000 square feet and bigger continues to be active in Orange County.
The vacancy rate for OC R & D; space was 4.1% in the first quarter, down from 4.8% in the fourth quarter and 4.5% a year ago.
The key to the decline in R & D; vacancy during the past 12 to 18 months is the lack of space in OC.
The rising cost of land, coupled with the scarcity of space, continues to put pressure on R & D; development.
The hottest type of R & D; space for sale is buildings that are 6,000 square feet and smaller. Prices have risen to $275 to $285 per square foot and availability is at a 5-year low.
Expect to see increases in lease rates and sale prices due to demand and a lack of available space.
The average R & D; vacancy rate in OC is moving toward the 2% level by the end of the year.
West County posted the highest R & D; vacancy rate in the first quarter. Vacancy in the submarket was 7%, up from 4.7% a year ago but down from 7.5% in the fourth quarter.
The John Wayne Airport area had the lowest vacancy rate of R & D; submarkets in the county in the period. The area’s vacancy of 2.9% was down from 3% a year ago and unchanged from the fourth quarter.
The biggest decline in vacancy was posted by South County. The average vacancy rate there fell to 4.6% in the first quarter, down from 8.2% a year ago and 6.5% in the fourth quarter.
South County recorded the highest average asking lease rate for R & D; space in the first quarter at 96 cents per square foot. Rates in South County are up from 85 cents per square foot a year ago and 89 cents per square foot in the fourth quarter.
North County also saw a bump in the second quarter, where the average lease rate of 78 cents per square foot was up from 75 cents a year earlier and 74 cents in the fourth quarter.
Lease rates in West County and the airport area were off from a year ago. In West County, the average first-quarter lease rate of 71 cents per square foot was down from 76 cents a year ago and unchanged from the fourth quarter.
The average airport area lease rate was 74 cents per square foot in the first quarter, down from 83 cents a year ago and 76 cents in the fourth quarter.
Marchiorlatti is a first vice president in the Newport Beach office of CB Richard Ellis Group Inc.
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