As the year comes to a close, activity in the office and industrial markets appears to have picked up in the greater John Wayne Airport area submarket, but the number of deals still is slow.
In the airport area’s industrial sector, third quarter vacancy for manufacturing and warehouse buildings was up 2% from the second quarter. Research and development space vacancy was up 31% from the prior year.
With a base of 68.6 million total square feet, the airport area recorded 171,378 square feet of negative net absorption in the third quarter, with manufacturing and warehouse buildings giving back 53,722 square feet of that.
Research and development contributed a substantial 241,920 square feet of negative absorption.
The negative absorption resulted in a slight increase in vacancy for manufacturing and warehouse space, which saw vacancy increase from 4.9% to 5%.
The amount of research and de-velopment space back on the market had a significant impact on vacancy, as rates jumped from 3.5% to 5.1% in that segment.
Average asking lease rates for manufacturing and warehouse buildings in the third quarter was 54 cents per square foot, down from 57 cents in the second quarter.
While slight, this represents a continued trend of declining rates in the market as average asking rents dropped 12.9% from a year earlier.
The research and development market saw similar results as rents dropped 3 cents per square foot for the quarter and 14.4% from a year earlier.
Meanwhile, the airport area office market showed signs of life with 136,467 square feet of positive absorption for the quarter.
Compounding on the first half numbers, the airport area has seen 203,542 square feet of office space absorbed since January.
As a result, vacancy for the quarter dropped from 19.3% at the end of the second quarter to 19%.
But that is where the good news ends.
The average asking lease rate in the third quarter was $2.07 per square foot, down 6 cents from the previous quarter and 13.4% from a year earlier.
And despite the positive gains in absorption for the year, there currently is 8,971,119 square feet of vacant office space in the airport area.
Numbers aside, there is a growing consensus that the market is stabilizing. Activity in all sectors has increased, as confidence among local businesses builds.
Economists are beginning to cautiously project job growth, which will have a direct impact on the overall health of the airport area.
Data and analysis by CB Richard Ellis Group Inc.
The Real Estate Watch Chart
Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
