Orange County had about 1.1 million square feet of industrial space under construction at the end of the third quarter, with the majority of the projects—849,015 square feet—concentrated in North Orange County.
The majority of the buildings had been presold or preleased before completion and will have very little impact on the availability and vacancy rates.
Newly completed construction totaled 144,754 square feet, and new construction projects totaled 38,482 square feet.
Construction, Costs
Construction activity remained slow, but as a result of a tight market and the strict implementation of Title 24 (lower coverage ratios), construction and building costs have noticeably increased.
Preleases and the lack of substantial construction in the pipeline have undermined efforts to add adequate supply for tenants desiring quality space.
CBRE Econometric Advisors predicts that absorption will continue to outpace completions well into next year.
Office Market
The Irvine Company’s project at 200 Spectrum, until the third quarter, was the only prominent ground-up office building. It has been under construction since last year’s third quarter and is due to be completed in April. Now the 425,000-square-foot prime, class A property will be joined at Irvine Spectrum by Broadcom Corp.’s corporate campus. The chipmaker is constructing a five-building, 1.1-million-square-foot corporate campus in the Irvine Spectrum submarket that’s scheduled to be finished in 2018.
The Broadcom campus will be the first commercial development at Great Park Neighborhoods, a mixed-use, master-planned community.
Irvine Co. Project
Irvine Co. has yet another project planned for Irvine Spectrum that it plans to begin construction on early next year. The company plans to build six class A, low-rise office buildings that will total about 529,000 square feet of office space.
Four three-story buildings will be constructed at the Discovery Business Center, and two four-story buildings will be built at Sand Canyon Business Center.
The Irvine Co. developments, which is being built without tenants preleased, will bring some much-needed supply to Irvine Spectrum, where direct vacancy rates are 4.7% and asking rates increased 10.7% from last year’s third quarter to this year’s.
Data and analysis provided by CBRE Research
