The South Orange County industrial market saw 39,262 square feet of negative net absorption in the fourth quarter, though the year-to-date total remained positive at 314,049 square feet.
The overall vacancy rate decreased to 2.6% from 3.5% in the fourth quarter of 2014, reflecting a 25.7% decline.
The market is made up of manufacturing and warehouse and research and development segments. The density of research and development buildings and the South Orange County user base typically give the sector steady activity and make it attractive to biotechnology companies in particular.
The vacancy rate for the research and development segment of the market remained steady at 4%. R&D product recorded positive 27,879 square feet of net absorption in contrast to the negative net absorption generated in the third quarter. That brought the year-to-date total to 29,692 square feet of positive net absorption.
Conversely, the manufacturing and warehouse segment recorded negative net absorption, ending the quarter at negative 67,141 square feet. The decrease in occupancy levels pushed the vacancy rate up to 1.7% from 1.4% in the third quarter. The year-over-year vacancy rate, however, was down by approximately 45%.
The average asking rate in the manufacturing and warehouse sector remained at 85 cents per square foot, and the research and development sector decreased 1 cent to $1.01 per square foot quarter-over-quarter. That brought the overall asking rate to 94 cents per square foot, a 1 cent increase from the third quarter and a 12% year-over-year increase.
Demand is expected to increase, so South Orange County average asking lease rates are expected to continue rising.
Research and analysis provided by CBRE Research
