The research and development segment includes 1,081 buildings and 42 million square feet of space. It accounts for about 17% of Orange County’s total industrial market.
The majority of the research and development space is located in the Greater Airport Area and South OC submarkets, which combine to account for 27.8 million square feet, or more than 65% of the total for the segment.
Third-Largest
North Orange County is the third-largest research and development submarket, with just less than 9.6 million square feet.
West Orange County has nearly 4.9 million square feet of research and development space, the smallest of the submarkets.
The segment saw a lot of activity in the second quarter, with 409,742 square feet of gross absorption, up from 329,584 square feet in the prior period. It made progress with 132,832 square feet of positive net absorption.
South Orange County saw the most positive net absorption, with 140,748 square feet in the second quarter. West Orange County added 29,099 square feet. North Orange County saw no net change.
Airport Area Lags
The area around John Wayne Airport—which has seen steady gains in the office market and the manufacturing and warehousing segment of the industrial market—was the only submarket in negative territory on research and development space. The Greater Airport submarket saw 37,015 in negative net absorption for the second quarter.
The overall improvement on absorption and a lack of new construction combined to push the segment’s vacancy rate down to 4.9% in the second quarter from 5.2% the prior period, although it’s still well above the 3.9% rate a year earlier.
Average asking lease rates continued to fall, but the pace of declines slowed. The average asking rate for research and development space countywide fell to 82 cents per square foot in the second quarter, a drop of two cents from the prior period and seven cents from a year earlier.
South OC Rate
The rate increased to 92 cents, up one cent from the prior quarter, in South Orange County. It fell to 79 cents, down one cent, in the Greater Airport Area submarket; held steady at 76 cents in West Orange County; and dropped to 80 cents, down 12 cents, in North Orange County.
Cole is an associate in the Newport Beach office of CB Richard Ellis.
