Orange County’s industrial market continued to record healthy levels of activity in the third quarter, ending with 2.8 million square feet of gross activity and resulting in 208,021 square feet of positive net absorption.
Gross activity levels totaled 7.8 million square feet at quarter’s end.
The market remains of interest to tenants, but it’s a challenge to find quality available space.
Availability
The availability of industrial space has dropped 42% since the fourth quarter of 2010 and ended the third quarter this year at 5.3%.
Year-over-year, the availability rate decreased more than 5%.
The availability is expected to remain low, falling into the 4% range over the next 12 months. That can be attributed to the lack of supply and development.
The vacancy rate has decreased 38% since the fourth quarter of 2010 to 2.4% at the end of this year’s third quarter.
Year-over-year, the vacancy rate decreased 17.2%.
The Greater Airport Area had the largest decline from the second quarter, dropping 10% to 2.7%. The North Orange County submarket remained unchanged but continued to hold the lowest vacancy rate at 1.8%.
The West Orange County and South OC submarkets recorded vacancy rates of 2% and 4.1%, respectively.
Rents
The average asking lease rate has been relatively flat over the past year, fluctuating between 66 cents and 67 cents per square foot since the third quarter of 2013.
The overall asking lease rate increased 1 cent to 68 cents per square foot. Lease rates for class A space have increased 10% to 15%.
Industrial rents are projected to grow 8.7% by next year’s third quarter.
Sales, due to low interest rates, have increased significantly in Orange County, pushing up the overall average asking sale price 6% over the past year to $144.60 per square foot.
Sale prices in South Orange County, where small building sales in particular have been active, are approximately 16% higher than the average price for the county.
Analysis by CBRE Group Inc.
