The Greater Airport Area demonstrated strong signs of an improving market during the third quarter of 2011. Confidence in the market from both tenants and landlords appears to be growing, with net absorption at positive levels, stabilizing rents, and reduced vacancy rates.
Healthy
The airport area posted a healthy level of net absorption at positive 596,568 square feet, with all product types hitting positive numbers in the third quarter. The manufacturing and warehouse sector represented 462,408 square feet of the total absorption, while the office sector represented the lower end, with positive absorption of 7,378 square feet.
Vacancy rates decreased across all product types. The most dramatic change was experienced in manufacturing and warehouse, where vacancy fell to 3.5%, down from the second-quarter rate of 4.4%.
The office market remains challenged with approximately 7.8 million square feet of office space still vacant. The office sector posted the highest rate of vacancy of all the product types in the airport area at 16.5%, compared with the previous quarter’s rate of 16.6%.
Meanwhile, average asking lease rates were mixed in the airport area in the third quarter, depending on product type. The retail sector represented the only rate reduction, down from its second-quarter rate of $3.56 to $3.47 in the third quarter. Industrial property experienced an uptick in rental rates with manufacturing and warehouse increasing from $0.53 to $0.56 and research and development jumping from $0.79 to $0.82. Average asking lease rates on the office sector held at $2.01.
Jobs
Though market conditions and trends during the third quarter have moved in the right direction, normalization and recovery remains largely dependent on future job growth. With employment projected to grow by 9,100 jobs by the end of 2012, the airport area could see sustained momentum in the near future.
Carroll is a sales assistant in the Newport Beach office of CBRE.
