The Orange County industrial market was dealt a trying hand in 2009.
But as the fourth quarter came to a close, it looked as though many of the rates that have been depleting so rapidly during the past few quarters may in fact be reaching a point of leveling off.
To start, increases were seen in both the availability and vacancy rates. Availability increased 0.2% to 10.9% and vacancy increased 0.2% to 5.3%.
While slight increases were recorded in the fourth quarter, the rate increases are somewhat minor in comparison to the rates seen a year earlier. In 2008, availability increased 33% to 8.2% and vacancy increased 47% to 4%.
The industrial market recorded a negative 357,123 square feet of absorption during the fourth quarter and slightly more than 2.2 million square feet of gross activity. While the county’s absorption is still negative, it is a welcome change to the 1.8 million square feet of negatively absorbed space recorded just three months earlier at the close of the third quarter.
The airport area industrial submarket had the most newly absorbed space in the fourth quarter, with 134,582 square feet.
The North County submarket had the least amount of absorbed space, with a negative 436,365 square feet.
Gross activity finished the fourth quarter strong, down only 7,344 square feet from the third quarter’s recorded 2.2 million-plus square feet of gross activity.
The average asking lease rate for industrial space decreased again in the fourth quarter, dropping one cent to stand at 61 cents per square foot. This rate is down roughly 16% from the 73-cent average asking lease rate recorded at the close of the fourth quarter of 2008.
The West County submarket was the only submarket to see an increase. It closed the quarter at an average rent of 58 cents per square foot, which is one cent higher than the third quarter.
Prices, Construction
Average asking sales prices also continue to decline.
They went from an average asking price per square foot of $145.37 in the third quarter to $138.99 per square foot in the fourth quarter.
The average asking sales price per square foot for industrial space dropped roughly $27 from the average asking price per square foot a year earlier.
The industrial market had one building complete construction during the fourth quarter: a 52,840-square-foot built-to-suit facility for Mitsubishi Materials Corp. in the city of Fountain Valley.
While construction starts are still few and far between, there was a significant construction start in the fourth quarter, as a 375,000-square-foot building began construction in the city of Anaheim.
OC currently has more than a half a million square feet of planned construction projects in the pipeline. While it is unclear when developers will start building, there has definitely been an uptick in planned construction.
Data and analysis by CB Richard Ellis Group Inc.
