A burst of activity in the Mid-Counties market—which straddles Orange and Los Angeles counties—brought the busiest third quarter in four years.
The Mid-Counties market is mostly industrial, with more than 2,500 buildings and 130 million square feet.
There were 51 deals completed in the third quarter, including 40 leases and 11 sales. Transaction volume rose 42% compared with a year earlier.
Strong Absorption
Gross absorption totaled nearly 2.3 million square feet for the quarter. The increase marked the third-consecutive quarter of strong absorption for buildings below 100,000 square feet, a category that had seen stubbornly high vacancy rates until last year.
Many of the deals of less than 100,000 square feet have been stimulated by owners providing aggressive lease rates and leasing concessions, especially for the older and less-functional properties. Class A space, on the other hand, is commanding a premium.
The average asking lease rate at the end of the third quarter was $0.52, down a penny from the prior quarter and even with a year earlier.
The average asking sale price was $102.83 per square foot, a 9% increase over third-quarter 2011.
Availability, Vacancy Rates
The availability rate and vacancy rate saw decreases compared to a year ago.
The availability rate for third-quarter 2012 fell to 6.8%, a 10% decrease from the same period in 2011.
The vacancy rate fell to 3.6%, an 18% decrease compared to a year earlier.
The premium pricing and declining levels of supply for class A buildings are stimulating a wave of development activity in the Mid-Counties market, with 1.2 million square feet of new development in various stages of completion and even more development projects on the way. These new projects are all situated in the city of Santa Fe Springs.
Bonwell is a first vice president in the Orange office of CBRE Inc..
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Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
