North Orange County remained OC’s tightest industrial submarket through the first quarter, with a vacancy rate of just more than 1%. The lack of quality space in North Orange County has forced some users to migrate to outlying areas such as the Inland Empire. Although the North County area experienced negative net absorption in the first quarter and the vacancy rate for industrial space rose, it still stood at just 1.2% since in the fourth quarter there was virtually no vacancy,only 0.6%,in the market.
The R & D; market in North OC was more open than the M & W; market in the first quarter, with vacancy of 4.5%, up from 1.6% at the same time last year.
The North Orange County market experienced the highest sale activity in OC in the first quarter, with more than 385,000 square feet sold. Industrial users, seeking to derive benefit from the tax play and offset the cost of equipment, have been opting to purchase properties, thus increasing the owner-user base, particularly in the northern portion of the county.
In response to the lack of vacancy in previous quarters, M & W; construction activity continued on 14 buildings totaling 508,000 square feet through the first quarter. Five buildings in Anaheim Hills were completed in the first quarter, increasing the North Orange County M & W; base by 147,000 square feet.
As the OC office market softened in the first quarter, the North and Central Orange County areas were the least affected, with a combined negative absorption of just 58,000 square feet. The market has remained active with small leases, but,as with the industrial market,it suffers from low vacancy of larger spaces. Of the 383 office projects included in the combined North and Central County office market, only 20 have vacancy in excess of 20,000 square feet (not necessarily contiguous). North Orange County had the lowest office vacancy rate in the county, 8.9% in the first quarter, and Central Orange County remained just below the county’s overall average vacancy rate at 11.1%.
Construction continued in North Orange County on a 49,633-square-foot pre-leased building at Brea Corporate Park. Office construction in Central Orange County included multiple buildings at the Hutton 17th Street office park and the 262,000 square-foot Stadium Gateway building (30% pre-leased as of the first quarter), which offers an opportunity for larger tenants looking for space in the market.
Analysis provided by CB Richard Ellis’ Global Research and Consulting.
