The North and Central Orange County submarkets finished the fourth quarter with mixed results.
Occupancy levels varied from sector to sector, along with average lease rates.
The two submarkets combine for more than 3,200 commercial properties totaling nearly 180 million square feet. Their combined vacancy rate, with the exception of the office sector, was below 6% for the fourth quarter.
There were some signs that an overall recovery in the commercial real estate market countywide is ongoing and having an effect in both North and Central OC.
Recovery Signs
There was 136,751 square feet of positive net absorption across all sectors in the two submarkets in the fourth quarter. They notched 303,223 square feet of positive net absorption for the full year.
The industrial sector, which includes about 2,500 manufacturing-and-warehouse buildings and nearly 200 for research and development, saw a boost in activity for the period, with slightly more than 892,000 square feet of gross leases and sales, up 35% from a year earlier.
The deals accounted for 106,435 square feet of positive net absorption, and took the vacancy rate down to 2.5%, the lowest for the industrial sector among all OC submarkets.
Manufacturing-and-warehouse space accounted for the entire gain, with 175,624 square feet of net absorption for the whole year. The fourth-quarter vacancy rate was 2.6%, down from 3.4% a year earlier.
Research and development saw negative net absorption of nearly 9,500 square feet for all of 2012. The category remained tight on space, however, with a vacancy rate of 1.1% at the end of the fourth quarter, up from 1% a year earlier.
The average asking lease rate for manufacturing-and-warehouse space moved up 3 cents to 51 cents per square foot.
The average for research-and-development space gained 2 cents to 61 cents per square foot.
Construction of industrial space is gaining momentum, with approximately 1.2 million square feet in the works.
Retail Sector
The retail sector in North and Central OC, which includes 283 centers and totals about 43.8 million square feet, saw its vacancy rate rise to 5.3% from 5.1% a year earlier.
Retailers remain cautious on expansion plans as the economic recovery remains slow even as retail sales and consumer confidence show signs of rebounding.
The two submarkets combined for 26,738 square feet of negative net absorption on retail space in the fourth quarter, which took the year-to-date total to a negative 39,309 square feet.
The average asking lease rate for retail space fell by 10 cents per square foot, to $1.98, in the fourth quarter.
Construction of new retail space in Orange County remains minimal, although there’s a notable exception in North OC, where The Source, a nearly 481,000-square-foot center, has broken ground in Buena Park.
The vacancy rate in North and Central OC for office space, a sector that includes 204 buildings, dropped to 14.3% in the fourth quarter from 15% a year earlier.
The office sector saw 57,054 square feet of positive net absorption, bringing its year-to-date total to 176,370 square feet.
The average asking lease rate held steady at $1.81 per square foot.
—Research and analysis provided by CBRE Research.
The Real Estate Watch Chart
Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
