Industrial construction in Orange County slowed in the first quarter after 1 million square feet of supply was delivered last year, with just 231,068 square feet under construction during the period.
All of the activity is taking place in North Orange County and the Airport Area, and three buildings totaling over 500,000 square feet were delivered in those submarkets. CBRE EA predicts development will be steady throughout this year.
Development activity has picked up over the past two years, though the amount of construction activity and completions still lags behind demand and absorption. The rezoning of industrial land to residential throughout the year also hasn’t helped ameliorate the issue. CBRE predicts that absorption will continue to outpace completions this year, even as several developments are scheduled to be completed late in the year and in early 2017.
Preleases and the lack of substantial new construction in the pipeline have undermined efforts to add adequate supply for tenants desiring quality product.
Office Market
Multiple office buildings were completed during the quarter, the largest of which was the 425,044-square-foot 200 Spectrum Center project that was finished in March—timely, given the 5.7% direct vacancy rate in the market. There has been significant tenant activity at the project, which is already 44.8% leased.
There are 2.8 million square feet of office space under construction in Orange County. Perhaps the most notable project to break ground during the quarter is 400 Spectrum Center, where construction began in February and is estimated to be complete by September 2017.
Another notable project under construction in Orange County is the 537,224-square-foot Boardwalk project on Jamboree Road, the largest speculative office project in Orange County. The Airport Office-area project will include 2 acres of landscaped, pedestrian-friendly grounds, creative accessory retail, and over-standard parking.
MicroVention’s 205,000-square-foot headquarters, the final phase of Parker Properties’ Summit Office Campus, is still under way in Aliso Viejo. Broadcom Ltd.’s 1.1-million-square-foot corporate campus is still projected to be complete in 2018, although it may no longer occupy the full square footage, at least not initially.
Data and analysis provided by CBRE Research
