Orange County’s research and development market continues to struggle.
The 468,571 square feet of negative net absorption posted in the second quarter caused overall vacancy rates to rise from 4.4% to 5.6%.
Lack of activity also is reflected in the average asking lease rate, which declined 5 cents compared to the first quarter. The average asking sale price for the county’s R & D; space increased slightly to $145.40 per square foot in the quarter.
Construction of R & D; buildings remains moderate with 280,332 square feet in the construction phase in the John Wayne Airport and South County markets.
The majority of the lease and sale activity in the quarter occurred in the South County market, which produced 262,676 square feet of gross activity.
South County also leads OC with an R & D; lease rate of 86 cents per square foot, up 2.4% from a year earlier.
The airport area has the lowest vacancy rate among the four R & D; submarkets at 3.4% in the second quarter. Although this is a small increase from the first quarter lease rate of 3%, it is a 29% decline from a year ago.
With six buildings totaling 182,604 square feet in the development phase, the airport area continues to see the highest level of construction activity. The airport area also has another four properties totaling 153,229 square feet planned for 2006.
R & D; construction also is under way in South County, with 97,728 square feet expected to be completed in late 2005 and early 2006.
Space requirements are slowly regaining momentum as companies begin to reinvest in their research and development sectors. New development of R & D; space should continue at its modest pace and bring vacancy rates back to a healthy level.
Although this segment of the market is in the recovery stages, it still remains attractive to users 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.
