One of the larger aerospace companies in North Orange County has re-upped the lease for its two main facilities in Anaheim.
Arden Engineering Inc., a subsidiary of Verus Aerospace, secured a five-year lease renewal at the company’s 144,000-square-foot manufacturing facility in Anaheim.
The buildings, located at 3130 and 3150 Miraloma Ave., serve as the respective headquarters for Arden and Verus, whose chief financial officer, Joyce Pae, was recognized at the Business Journal’s CFO of the Year Awards earlier this month.
The property stands a few blocks north of the Riverside (91) Freeway. The industrial complex is also near Boeing’s former campus in the area, which has seen heavy industrial redevelopment over the past decade.
Arden renewed its lease for the property at double its initial rate.
The company last signed a lease for the buildings 10 years ago. Its renewal brought the lease, which for years “was artificially below market,” back to “the market rate,” Matt Biggs, senior vice president at Lee & Associates told the Business Journal.
Local lease rates have more than doubled from a decade ago. The asking monthly rate in first-quarter 2014 for OC industrial properties was 62 cents per square foot, according to a report by Voit Real Estate Services.
The average asking lease rate in the first quarter this year was $1.70 per square foot.
Voit’s Mike Vernick and Michael Hefner represented the landlord, New York-based investment manager Nuveen LLC, in the renewal. Brian Bennett and Robert Feathers of Kidder Mathews negotiated the deal on behalf of Arden.
Financial terms of the renewal were undisclosed.
2023’s Peak
The average asking rental rates among OC industrial properties peaked last year, according to JLL. Rates have since slipped slightly from last year’s record high.
The average asking rent in the first quarter fell from $1.79 per square foot to $1.70, according to data by Voit.
The decline in asking rental rates correlates with rising vacancies, which rose from 2.6% in the fourth quarter last year to 3.2% in the first quarter this year, the Voit report notes.
Despite the increased vacancies and lower rents, OC’s industrial real estate market has remained strong since the pandemic, as the thriving e-commerce industry has been fueling demand for industrial space.
The demand is being met with new supplies.
Inventory for industrial properties in OC grew 2.8% year-over-year to 146.6 million square feet in the first quarter this year, according to a report by Savills.
There’s currently 1.2 million square feet of industrial product under construction in OC. Over 250,000 of that space was expected to be delivered in the first quarter.
According to Savills, much of that space as well as future deliveries are not pre-leased, which will drive up vacancy rates. Less than a third of incoming inventory is pre-leased, the JLL report said.
The modest downturn follows a fruitful year for OC industrial spaces, where average asking rents in the first quarter of 2023 reached their highest level since 2019.
OC, however, remains the tightest industrial market in Southern California, according to JLL.
Declining demand for industrial products coupled with rising construction costs will continue to challenge the financial feasibility of new developments, JLL projected.
