The industrial market in Orange County started off this year with a healthy pace of activity after a slight drop-off at the end of last year.
The first quarter saw 81 leases and sales that combined for 2.9 million square feet of gross activity. That’s slightly lower than the 2010 average but higher than 2009, when the market was near the bottom of the recent economic downturn.
The robust activity in the first quarter of this year helped offset losses from tenants moving out of buildings and resulted in 37,510 square feet of positive net absorption.
North County Leads
The North Orange County submarket was the only one to see positive net absorption, with its gain of nearly 700,000 square feet in contrast to declines in the other three submarkets
The Greater Airport Area had 397,329 square feet of negative net absorption. South Orange County followed with 176,787 square feet of negative absorption. The West Orange County submarket finished the first quarter with 85,338 square feet of negative absorption.
Manufacturing and warehouse buildings saw the majority of the activity countywide in the first quarter with about 2.5 million square feet.
Leases accounted for 2.3 million square feet in the first quarter, up from 2.2 million square feet a year earlier.
Sales accounted for about 535,000 square feet in the first quarter, down from about 1 million square feet for the same period in 2010.
Vacancy Rate Down
The countywide vacancy rate held at 3.9% from the prior quarter, down from 4.5% a year earlier.
The vacancy rate for manufacturing and warehouse space declined to 3.7%; it rose to 4.9% in the research and development segment.
The average lease rate remained at 57 cents per square foot in the first quarter, a level it has held since the second quarter of 2010. The rate is two cents off a year earlier.
The average sale price was $124.24 per square foot in the first quarter, an increase of about $1 from the fourth quarter of 2010.
Construction likely will remain weak until market fundamentals can support speculative development, lease rates increase and construction lending becomes more readily available.
Analysis provided by CB Richard Ellis Research.
