Activity in the West Orange County submarket was down in the third quarter, and net absorption fell into the red.
The submarket historically has held low vacancy rates along with the rest of the market, with all of the quality space occupied.
Hardly any development is in the pipeline, and the vacancy rate continues to fall, so lease rates have steadily ticked up in the submarket over the past 12 months.
The West OC submarket consists of 35.9 million square feet of manufacturing and warehouse space and nearly 5.2 million square feet of research and development space.
Gross lease transactions and user sales equated to 562,455 square feet, bringing the year-to-date gross activity total to 2.1 million square feet.
Net absorption was negative, however, ending the quarter at negative 56,951 square feet. The vacancy rate, due to the negative net absorption, ticked up from 1.5% in the second quarter to 2%. Year-over-year vacancy decreased 4.8%.
The average asking lease rate increased 5% from the second quarter to 63 cents per square foot at the end of the quarter. The manufacturing and warehouse sector ended the quarter at 63 cents per square foot, a 6.8% increase from the previous year, and the research and development sector ended at 66 cents per square foot.
Development
The two buildings that broke ground during the first quarter of 2014 in West Orange County were delivered to the market during this year’s third quarter. Both buildings are in Huntington Beach and total 144,754 square feet.
The development activity is the first the West OC submarket has witnessed since the second quarter of 2008.
The data and analysis is provided by CBRE Research
