More than a million square feet of new commercial space was delivered in Orange County’s industrial market last year, surpassing the 958,241 square feet recorded in 2014. A majority came in North Orange County and West Orange County, which totaled 839,679 square feet and 144,754 square feet, respectively.
The county now has 552,007 square feet under construction. A majority, or more than 300,000 square feet, is concentrated in North Orange County. Development activity picked up year-over-year, though the amount of construction activity and completions still lagged demand and absorption. The rezoning of industrial land to residential throughout the year contributed to the trend.
CBRE Econometric Advisors predicts that absorption will continue to outpace completions well into this year, even as several developments are scheduled to be completed late in the year and in early 2017.
Preleases and the lack of substantial planned construction have undermined efforts to add adequate supply for tenants desiring quality product.
Office Market
No new projects came online in the county during the quarter, and none were completed. More than a dozen proposed projects would add significant square footage to a market with sub-10% vacancy rates.
The only projects under construction are a 425,000-square-foot prime, class A property by Irvine Company that will be joined at Irvine Spectrum by Broadcom Corp.’s corporate campus.
Broadcom is constructing a five-building, 1.1 million-square-foot corporate campus in the Irvine Spectrum submarket that’s scheduled to be complete in January 2018. It will be the first commercial development at Great Park Neighborhoods, a mixed-use, master-planned community.
Irvine Co. has yet another project planned for Irvine Spectrum that it plans to start early this year. It announced in August that it will build six class A low-rise offices that will total 528,000 square feet. Four three-story buildings will be constructed at the Discovery Business Center and two four-story buildings at Sand Canyon Business Center. The speculative development will bring some much-needed supply to Irvine Spectrum, where direct vacancy rates are 4.7% and asking rates increased 11.7% year-over-year.
Data and analysis provided by CBRE Research
