A glimmer of hope is evident with the increasing confidence in the industrial market in West Orange County.
California consumers slowly are gaining confidence in the economy and are planning to spend more on big ticket items in 2011, according to Chapman University’s latest economic forecast. Economists also predict a sharp rebound in manufacturing in the first quarter.
Production and new orders are expected to increase at a much faster rate in the first quarter. With increasing consumer spending, companies should begin hiring and continue to rebuild and restock their inventories. The demand for industrial space eventually will rebound.
Economists also predict 23,000 jobs added in 2011 versus a loss of about 11,000 in 2010. This equates to an unemployment reduction from 9.1% to slightly more than 8%.
We expect positive net absorption to continue as trade flows and inventory rebuilding improve through 2011. Companies will continue to capitalize on the financial benefits associated with lower inventory holdings.
Recent Deals
Two recent sales were done in Seal Beach’s Pacific Gateway Business Park consisting of a 64,060- and 57,003-square-foot building.
The new owners are a swimsuit maker and an aerospace company. Other companies that have relocated to the business park are in apparel, automotive, drugs, solar power, electronics and banking. The 10 industrial buildings consisting of 830,000 square feet close out the newest planned development in West Orange County.
Port business, a key market driver, has increased by about 25% since the low mark of 2009. It is estimated that exports from Orange County jumped 17.1% in 2010. This primarily is made up of transportation equipment and computer and electronic products, according to economists at California State University, Fullerton.
No construction of industrial space is under way. Manufacturing and warehouse space now accounts for more than 85% of vacant industrial space with an industrial base of nearly 40 million square feet.
Overall, the market is showing a slight improvement with tenant and buyer interest driven by low prices and rates. In this fluid market, stability with supply and demand coupled with the economic recovery, will remain the determining factors in 2011.
Goodmanson is a senior vice president 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.
