West Orange County saw a significant increase in activity during the fourth quarter of 2010, most notably in the manufacturing and warehousing segment.
Manufacturing and warehousing space is the largest segment in West County and accounted for 102,000 square feet in positive absorption. That took the vacancy rate for the segment down to 2.3%, a drop from the prior quarter and a decline of more than a third from a year earlier.
The activity for manufacturing and warehousing more than offset a slight loss in research and development and a larger chunk of negative net absorption for retail.
The gains in manufacturing and warehousing were accompanied by some stabilization in lease rates. Average asking lease rates held about steady against the third quarter, although they remain 7% below a year earlier.
That data reflects asking rates; actual deal rates are less.
The gains in the fourth quarter mean that there now is very little class A space available for manufacturing and warehousing in West County. Much of the available space is in older class B and class C buildings.
There is a more plentiful supply of class A space for research and development , and the recently concluded first quarter of 2011 could show positive net absorption in that segment.
Asking rates for research and development space have continued to decline at a slightly slower rate compared to the overall market.
A number of class A buildings were sold in the fourth and first quarters, notably in Seal Beach and Huntington Beach. Very few class A buildings are available for sale now, with prices on par with 2003 and 2004.
CBRE Econometric Advisors forecasts 5% rent appreciation in 2011 and overall net absorption for Orange County is expected to be up 45% from 2010.
The trend is expected to bring higher levels of absorption in class B and C space.
DeRevere is a senior vice president in the Anaheim office of CB Richard Ellis.
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