The South Orange County industrial market had a mixed third quarter, with the research and development segment recording negative net absorption and the manufacturing and warehouse sector seeing positive net absorption.
R&D
The market’s R&D building density helps it perform well, making it attractive to biotechnology companies in particular.
The R&D segment had negative 53,360 square feet of net absorption, in contrast to the positive net absorption generated there in the second quarter and bringing the year-to-date total to 1,813 square feet of positive net absorption.
The research and development vacancy rate increased from 3.6% to 4%. The manufacturing and warehouse sector recorded positive net absorption, ending the quarter at 69,006 square feet.
Steady demand in the manufacturing and warehouse sector once more pushed down vacancy rates, which dropped from 1.7% recorded in the second quarter to 1.4%. Year-over-year, the sector’s vacancy rate was down 50%.
The combined South Orange County market had 15,646 square feet of positive net absorption, bringing the year-to-date total to 353,311 square feet of positive absorption.
The overall vacancy rate dropped from 3.2% to 2.4% year-over-year, reflecting a 25% decline.
Asking Rates
The average asking rate in the manufacturing and warehouse sector increased from 78 cents to 85 cents per square foot, and the research and development sector added 3 cents, increasing to $1.02 per square foot, quarter over quarter. That brought the overall asking rate to 93 cents per square foot, a 4-cent increase over the second quarter.
Demand is projected to rise in the industrial market, whose average asking lease rates are expected to continue increasing.
Research and analysis provided by CBRE Research
