Orange County’s manufacturing and warehouse market continued to improve through the second quarter.
Activity increased across Orange County with 107,553 square feet of positive net absorption. Vacancy rates stayed constant from the first quarter of 2012 at 3%, but the increased demand for space drove up the average asking lease rate 2 cents from the previous quarter and 5 cents from a year ago to 56 cents per square foot.
A jobs rebound has helped the real estate market.
The unemployment rate now stands at 7.9%, down about 14% from last year with 27,400 jobs being added in OC since July 2011.
Total gross activity for the manufacturing and warehouse market was 2,853,194 square feet in the second quarter. North OC, for the second consecutive quarter, had the greatest net absorption with 210,700 square feet, followed by West OC at 118,684 square feet. The area around John Wayne Airport and South OC reported negative net absorption amid increased vacancies.
Asking lease rates have risen as the demand for space has risen. The average asking lease rate is now 56 cents per square foot.
South OC continues to have the highest lease rate at 67 cents per square foot, while North OC has the lowest at 49 cents per square foot.
The continuing high demand, dropping vacancy rates, rising lease rates and limited availability have led developers to begin manufacturing and warehouse properties for the first time since 2007.
The first project to break ground is an 84,350-square-foot building in Brea that’s being built on spec.
There will be additional manufacturing and warehouse projects under construction in the future, as OC businesses continue to hire and other factors—such as lease rates, vacancy rates and net absorption levels—continue their positive trajectory.
Seybold is a senior vice president in the Orange office of CBRE Group Inc.
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Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
