Third-quarter vacancy rates in Orange County’s manufacturing and warehouse sector dropped to 2.2%, down 21% from a year earlier.
The market encompasses 5,698 buildings totaling more than 209 million square feet and is the largest segment of the county’s industrial market.
The North OC submarket recorded the lowest vacancy rate during the quarter: 1.8%. South Orange County posted the highest rate, at 3.2%. Falling vacancy rates, as has been the case over the past several years, continue to put more pressure on rents and cause them to rise.
M&W Rents
Manufacturing and warehouse market rents increased year-over-year. The average asking lease rate at quarter’s end was 62 cents per square foot, up 1 cent from the second quarter and 4 cents from a year earlier.
The South Orange County submarket recorded the highest rents, at 70 cents per square foot, and the Airport Area remained close behind at 69 cents per square foot.
Airport Area rents increased 7 cents over the trailing 12 months, the most growth in the Orange County market.
Net absorption remained positive at 371,933 square feet relative to the 2.6 million square feet of gross activity. More than 60% of the total net absorption in the county took place in the Airport Area, which experienced 231,644 square feet of positive net absorption.
North OC was the only submarket to record negative net absorption, largely due to CBRE bringing two large projects to the market. The first was 300,000 square feet of new development at Panattoni Development Co.’s Anaheim Concourse, and the second was KTR Capital Partners’ 440,227-square-foot corporate headquarters in Fullerton, the former headquarters of Yokohama Tire Corp.
North, West OC Development
The biggest effect of shrinking availability is in industrial development taking place in the North Orange County and West OC submarkets. The two submarkets combine for about 1.1 million square feet in the pipeline. The majority of the development is occurring in North OC, where nearly 1 million square feet is under construction.
Ward is a first vice president at CBRE. Data and analysis provided by CBRE Research.
