The Orange County manufacturing and warehouse segment’s vacancy rate dropped to 2.3% in the first quarter, compared to the fourth quarter’s rate of 2.6%. The year-over-year rate dropped 8%.
The market consists of 5,701 buildings totaling nearly 210 million square feet and is the largest segment of the industrial sector.
The Greater Airport Area submarket had the lowest vacancy rate, 1.8%, while South Orange County posted the highest at 2.9%.
Rents
Low vacancy rates, as has been the case over the past several years, continue to put more pressure on rents, causing them to rise.
Manufacturing and warehouse market rents increased 3 cents year-over-year from 60 cents per square foot to 63 cents per square foot.
The South OC submarket recorded the highest asking rent at 75 cents per square foot, up 5.6% over last quarter and 10% over last year. The Airport Area remained close behind at 69 cents per square foot, an increase of 7.8% over last year.
The level of tenant demand and the lack of available space have resulted in landlords continuing to push rents higher with the market in their favor.
The sector, with more than 2.5 million square feet of gross activity, generated 758,154 square feet of positive net absorption. That compared to negative absorption of 250,705 square feet in the fourth quarter.
The Greater Airport Area contributed the most absorption, ending the quarter with 452,993 square feet, followed by the North OC submarket with 304,468 square feet. West Orange County was the only submarket that had negative net absorption, ending the quarter with negative 37,106 square feet.
Development
Industrial development is starting to gain more traction.
Construction continued on the third phase of the Anaheim Concourse Distribution Center, and two buildings in Huntington Beach totaling 144,754 square feet also remained under construction, bringing the total manufacturing and warehouse construction square footage to 984,433 square feet at the end of the quarter.
Data and analysis provided by CBRE Research
