Representing about 17% of Orange County’s total industrial buildings, the research and development sector totals 1,077 buildings and accounts for about 42 million square feet of space.
With nearly 1.65 million square feet of research and development space available, the John Wayne Airport area and South County submarkets make up 75% of all the empty research and development space in OC. West County accounts for roughly 20%. North County makes up 5%.
Despite an increase in the availability rate, the research and development market continued to show positive yearly results in absorption, activity, vacancy and asking lease rates.
The research and development sector saw 323,211 square feet of absorption in the second quarter, up from the 147,608 square feet of activity recorded a year earlier.
As a result, vacancy rates declined for the third straight quarter. Even with 1.65 million square feet of total vacant research and development space in the county, the overall vacancy rate dropped to 3.9%, representing a 2.5% decline from the first quarter and an 11.4% drop change from a year earlier.
The availability rate, which measures total square feet both vacant and occupied on the market, rose slightly to 10%, eclipsing the high mark of 9.9% recorded in the fourth quarter.
As absorption remained positive for the third straight quarter, we finally saw a small increase in the asking lease rates. On average, monthly asking rents for the county were up 2 cents per square foot from the first quarter to 89 cents per square foot. The quarterly increase in rent is a step in the right direction, but there still is ground to make up as rents are down 5 cents per square foot from a year earlier.
With no new research and development buildings under construction in the county, companies will continue to look to existing projects that offer a strategic advantage to facilitate growth in the coming years. This is a trend we expect to continue through 2010.
Spatafore is a senior associate in the Newport Beach office of CB Richard Ellis Group Inc.
The Real Estate Watch Chart
Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
