There were approximately 1.2 million square feet of industrial space under construction at the end of the first quarter.
Three buildings are under construction in Brea totaling 357,858 square feet; the 481,821-square-foot third phase of Anaheim Concourse broke ground; and construction started on two buildings totaling 172,713 square feet in Fountain Valley.
Industrial development has predominantly been in the North Orange County submarket, and this is the first time since the third quarter of 2009 that the Greater Airport Area submarket experienced development activity.
The lack of available land and competition from residential developers are constant struggles in the Orange County industrial market, though the need for new, quality space is urgent as demand increases.
No buildings were delivered to the market during the quarter, though last year 958,241 square feet of supply came on board, surpassing the 501,780 square feet recorded in 2013.
Preleases and the lack of substantial new construction in the pipeline have undermined efforts to add adequate supply for tenants desiring quality space.
CBRE Econometric Advisors predicts that absorption will continue to outpace completions well into this year, even as several developments are scheduled to be completed in 2015.
Office Market
Construction isn’t a prominent trend in the office market just yet.
The lone true office property under construction, 200 Spectrum, which is scheduled to be delivered in the second quarter of 2016, is being completed at an opportune time.
Irvine Spectrum submarket vacancies decreased from 4.1% to 3.3% during the first quarter, and office buildings there are now nearly entirely occupied.
The Source Tower, an M + D Properties mixed-use development with 50,000 square feet of office space, broke ground in the third quarter of last year and is due to be delivered in the first quarter of 2016.
Irvine-based fabless semiconductor company Broadcom Corp. is expected to break ground on its $778 million headquarters this quarter. The campus could end up being more than 2 million square feet and accommodate 8,000 employees. The company currently occupies approximately 900,000 square feet in the Greater Airport Area, so the move will bring more than 1 million square feet of positive absorption to the county.
Research and analysis provided by CBRE Research
