The South Orange County industrial market had negative net absorption and slowed activity at the end of last year.
The market is made up of manufacturing and warehouse and research and development buildings. The sector typically performs well and is particularly attractive to biotechnology companies.
R&D
The research and development space, though, recorded negative 117,538 square feet of net absorption in the fourth quarter compared to 63,696 square feet of positive absorption in the third quarter. The research and development vacancy rate remained unchanged at 3.9%, while dropping 28.7% year-over-year.
The manufacturing and warehouse sector also had negative net absorption, ending the quarter at negative 83,052 square feet. The sector, consequently, experienced an uptick in vacancy over the third quarter from 3.2% to 3.4%. The year-over-year vacancy rate was down 2%.
The overall South Orange County market totaled 200,590 square feet of negative net absorption during the quarter, compared to the 203,370 square feet of positive net absorption in the third quarter. The full-year net absorption remained positive at 107,336 square feet.
Vacancy, Asking Rates
The overall vacancy rate increased slightly from 3.5% to 3.8%, reflecting an 8.5% increase quarter-over-quarter. The average asking rate for the manufacturing and warehouse sector increased from 70 cents per square foot to 71 cents, and the research and development sector increased from 96 cents to 99 cents per square foot, quarter-over-quarter. That brought the overall asking rate to 84 cents per square foot, a 2-cent increase over the third quarter.
The market, with an expected increase in demand, should continue to experience rising average asking lease rates.
Research and analysis provided by CBRE Research
