The Orange County industrial market continued to tighten in the third quarter with a net absorption of 806,307 square feet. The vacancy rate ended the quarter at 3.7%, down from 4.2%.
OC had an increase in the average asking rent for industrial space for the first time since the fourth quarter of 2007, and many businesses are moving forward with previously postponed growth plans.
More expansion may be on the horizon. Industrial employment is projected to grow by 9,100 jobs by the end of 2012, according to CBRE Econometric Advisors.
Gross activity for the third quarter for the OC industrial segment is 2,285,109 square feet, with all submarkets reporting a positive net absorption (with the exception of West Orange County). The John Wayne Airport area saw the greatest net absorption with 462,408 square feet, followed by North Orange County, which absorbed 350,278 square feet.
South OC
South Orange County had positive net absorption of 150,776 square feet, and West OC had negative absorption of 60,155 square feet.
West Orange County maintains the lowest vacancy at 2.7%.
The Orange County industrial market has survived the downward cycle of 2008 and 2009. Vacancy has been cut in half from its high in 2009, and demand is healthy and getting stronger.
The North, West, Airport and South submarkets are land-constrained with almost no new construction, which suggests that rental rates will trend upward significantly in the coming year.
These trends are also evident in the markets that border Orange County.
Neighbors
Los Angeles reported a 3% vacancy rate and the Inland Empire had a 6.4% vacancy. Both report a lack of quality inventory and significant lease rate appreciation in class A assets. Both markets report overall demand is healthy, and multiple users are competing for the remaining supply.
Bierbaum is a senior vice president in CBRE’s office in Orange.
The Real Estate Watch Chart
Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
