By RYAN PETERSON
West Orange County’s industrial market saw modest yet positive rent appreciation in 2007 with a yearly increase of 4.7% and an average lease rate of 67 cents per square foot.
Much of the submarket’s activity has been found within the Pacific Gateway Business Center in Seal Beach. The 830,000-square-foot development consisting of 10 buildings saw three buildings close escrow in the third and fourth quarters with four pending escrows slated to close in the first quarter.
Despite the instability in the financial markets, owner-occupier buyers continue to capitalize on attractive financing and see the long-term value of a West County location.
Flight to quality has been the most prevalent trend in the marketplace today. Tenants and buyers are seeking properties that offer a warehouse clearance greater than 24 feet high, multiple dock positions, high-image finishes and premier locations.
Unlike the slumping housing market that has seen values fall as much as 20% in some parts of the county, West County industrial property values have held firm with an average asking price of $168 per square foot.
Deal velocity (the number of completed leases and sales) is down slightly to start 2008. But there are no indications of future drops in values. Lease rates have held firm and the current vacancy rate sits at about 5.5%, which is close to the submarket’s historic average.
Despite the subprime and housing problems that have cast a dark cloud over the entire industry, the industrial market sector in 2008 is expected to see many noteworthy transactions and positive momentum moving forward.
Peterson is a senior associate in the Anaheim office of CB Richard Ellis Group Inc.
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