The Mid-Counties Market is defined as the cities along the border of Orange and Los Angeles counties. The strength of the market continued through the third quarter of 2000, as indicators remained positive in both the office and industrial sectors.
Office Market
Vacancy rates in the Mid-Counties office market have been on a steady decline since the third quarter of 1999, when overall office vacancy stood at 19.5%. The trend continued through the third quarter, as the rate dropped to 11.8%, presenting an annual decrease of more than 39%. Somewhat more than 81,000 square feet were absorbed in the third quarter, bringing the total absorption for the year to 400,589 square feet. This is a vast improvement over the cumulative negative absorption seen in 1999, which had fallen to a negative 290,333 square feet by the third quarter.
The average asking lease rate for office space leveled off in the third quarter of 2000 at $1.72 per square foot per month. Seal Beach achieved the highest average asking lease rate in the Mid-Counties: $2.40.
Construction activity heated up in the Mid-Counties office market as the second half of 2000 began. With the completion of two low-rise buildings at the Heritage Springs project, 43,000 square feet were added to the Mid-Counties office base. With construction in the cities of Cerritos and Cypress that broke ground during the third quarter, a total of 431,606 square feet are under way.
Industrial Market
The industrial availability rate improved as well during the third quarter, as it dropped to 5.2%. In the same quarter of 1999, the availability for industrial space in the Mid-Counties stood at 6.5%. Actual vacancy showed a decrease to just 3.4%, down from 3.6% in the second quarter.
Net absorption in the industrial sector improved from a negative bout in the second quarter, to positive 977,725 square feet in the third, bringing the year-to-date absorption to 1.9 million square feet. Total sale and leasing activity reached more than 2.5 million square feet.
The average asking lease rate for industrial space ended the quarter at 49 cents per square foot per month, 11% higher than the rate in the third quarter of 1999.
