The Orange County industrial market finished strong in 2010, generating 13.1 million square feet of gross leasing and sales.
Manufacturing and warehouse space generated the majority of the fourth quarter’s leasing at 3.7 million square feet.
With a base of slightly more than 209 million square feet, the county’s manufacturing and warehouse space saw vacancy rates decrease to 3.8% in fourth quarter.
This was an improvement from the third quarter with a 12% decline. This also was a substantial improvement from a year earlier with a vacancy decline of 26%.
Seeing the most dramatic decline, the North County submarket now holds a vacancy rate of 3.6%, down from third quarter’s 4.2%.
There were several significant leases at the end of the year, including Panasonic Corp. leasing 300,000 square feet and Straub Distributing Co. leasing 281,548 square feet.
Both transactions were in Anaheim.
While the Panasonic deal was for more traditional warehousing use, the Straub transaction included the addition of nearly $4 million in temperature controlled areas within the warehouse.
Straub, a beer distributor, leased the building for 15 years.
At the end of 2010, the average asking lease rate for space more than 10,000 square feet was 57 cents per square foot, which remained constant from last quarter’s average.
If vacancy rates continue to decline, expect moderate rent growth in 2011. This first will be seen among class A buildings, which are quickly becoming scarce in the market.
Ward is a vice president in the Anaheim office of CB Richard Ellis.
The March 14 Real Estate Watch column was provided by CB Richard Ellis research and consulting staff and incorrectly attributed to Allison Schneider.
The Real Estate Watch Chart
Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
