The fourth-quarter manufacturing and warehouse sector vacancy rate in Orange County held steady compared to third quarter rates at 1.8%, representing a 30.8% year-over-year drop.
The sector, consisting of 5,715 buildings totaling nearly 211.7 million square feet, is the largest segment of the industrial market.
The West and South Orange County submarkets ended the quarter with vacancy rates of 1.8% and 1.7%, respectively; the Greater Airport Area with 1.1%; and the North Orange County submarket with 2.3%. Low vacancy rates continued to put upward pressure on rents, as has been the case over the past several years.
Market rents increased 7 cents year-over-year to 69 cents per square foot. The South Orange County submarket recorded the highest asking rent at 85 cents per square foot, steady compared to the third quarter though up 19.7% over last year. The Airport Area was close behind at 73 cents per square foot, an increase of 4.3% year-over-year.
The high level of tenant demand and the lack of available product meant that landlords continued to push rents higher, and they should do so as long as the market is in their favor.
The market, with nearly 3 million square feet of gross activity, generated 294,345 square feet of positive net absorption, bringing the annual total to 2.5 million square feet.
The North Orange County submarket contributed the biggest amount of absorption, ending the quarter with 281,241 square feet, followed by the Greater Airport Area with 102,721 square feet. The South and West Orange County submarkets generated negative net absorption, however, ending the quarter with negative 67,141 square feet and negative 22,476 square feet, respectively.
The industrial market delivered over 1 million square feet of new supply last year, surpassing the 958,241 square feet recorded in 2014. A majority of the newly delivered supply was in North Orange County and West Orange County, totaling 839,679 square feet and 144,754 square feet, respectively.
Orange County currently has 552,007 square feet under construction, a majority of that concentrated in North Orange County, where nearly 400,000 square feet is under way.
Data and analysis provided by CBRE Research
