Orange County’s recovering research and development sector posted positive absorption in the third quarter.
Quarterly absorption of 280,008 square feet was a reversal of the 468,571 square feet of negative net absorption posted in the second quarter.
This increase in activity helped spur a 10% decline in the R & D; vacancy rate to 5% in the third quarter.
Increased activity also was reflected in the average asking lease rate, which grew 5 cents to 81 cents per square foot in the period.
The average asking sale price for R & D; space in OC was $154.32 per square foot in the quarter.
Meanwhile, construction of R & D; buildings was flat at 280,332 square feet. Buildings are going up in the John Wayne Airport area and in South County.
Most of the R & D; sector’s lease and sale activity took place in South County, which recorded a solid 456,675 square feet of gross activity.
South County also led OC with a lease rate of 89 cents per square foot, up 7% versus last year’s 83 cents per square foot.
The airport area carried the lowest third-quarter vacancy rate,3.5%,among the county’s four R & D; submarkets. Although this is a small increase from second quarter’s vacancy of 3.4%, it is down 15% from a year ago.
With six buildings totaling 182,604 square feet in the development phase, the airport area is seeing the most R & D; construction in OC. Another four properties totaling 153,229 square feet are planned in the airport area in 2006.
South County is set to see 97,728 square feet of R & D; space finish construction by early 2006.
Recent space requirements show that companies are beginning to reinvest back into their R & D; operations.
R & D; nevertheless is expected to stay modest, with absorption bringing vacancy rates back to a healthy level.
Although this segment of the market is in the recovery stages, it still remains attractive to both tenants and investors.
Data and analysis provided by CB Richard Ellis Group Inc.’s Global Research and Consulting.
The Real Estate Watch Chart – Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
CLICK HERE
to download
REAL ESTATE WATCH CHARTS
Please note: to download the file, you will need Adobe Acrobat Reader installed on your computer. For a free copy of the software,
click here.
