The research and development sector of Orange County’s industrial real estate market saw a downward turn with negative net
absorption of 266,502 square feet in the first quarter.
Total activity was 329,584 square feet for the quarter, down from 437,510 in the fourth quarter.
Research and development accounts for about 17% of the county’s total industrial real estate base, with 1,081 buildings and about 42 million square feet of space.
The majority of the research and development space is in the Greater Airport Area and South Orange County submarkets, which together account for about 65% of the market with a total of 27.8 million square feet.
North Orange County follows with about 9.6 million square feet of space.
West Orange County is the smallest with nearly 4.9 million square feet.
The recent declines in activity pushed the countywide vacancy rate for research and development up to 4.9% from 4.3% in the fourth quarter and 3.8% a year prior.
The airport area’s vacancy rate held nearly steady at 4.2% in the first quarter, up from 4% in the fourth quarter and 3.6% a year earlier.
The biggest increase in vacancy rates hit West County, with the rate at 8.3%, up from 6.7% in the fourth quarter and 6.8% a year
earlier.
South County saw its vacancy rate go to 7.5% from 6.2% the prior quarter and 5.2% a year earlier.
The overall availability rate, which measures vacant and occupied space on the market, did better. It was 8.7%, down from 9.3% in the fourth quarter and at its lowest point since 2008.
The availability rate has tightened up for higher-quality buildings, and asking lease rates have started to increase slightly despite the recent negative net absorption.
Average asking rents countywide rose three cents in the first quarter compared to the prior period, finishing at 84 cents. The average remained down from 87 cents a year earlier.
Averages for submarkets range from 76 cents in West County to 92 cents in North County.
No research and development building are under construction in the county.
Spatafore is a senior associate in the Newport Beach office of CB Richard Ellis.
The Real Estate Watch Chart
Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
