The South Orange County market continued its trend of positive net absorption with nearly 75,000 square feet in the first quarter. Vacancy rates, with the exception of the retail sector, continue to decline.
The vacancy rate in the office and industrial sectors has dropped an average of 17% year over year. The Irvine Spectrum, in particular, is experiencing increasing demand that’s helping push up lease rates, specifically in the office and industrial sectors.
The South OC office market continued its healthy trend of activity, with positive net absorption of more than 15,000 square feet in the first quarter. Absorption has been in the black since the first quarter of 2011. The vacancy rate finished the quarter at 9.9%, down from 12.8% a year earlier. Office demand is high, specifically in the Irvine Spectrum submarket. It’s been reported that office landlords in the Spectrum have been able to get between 25 cents and $1 per square foot more than other competitive markets. The average asking lease rate remains stagnant at $1.93 per square foot but is projected to steadily increase throughout the year.
Industrial
The industrial market is picking up in South Orange County. Small building sales have been active throughout the start of the year, and the supply of available buildings is slowly diminishing. Nearly 43,000 square feet of positive net absorption was recorded in the first quarter, with the research-and-development sector experiencing the majority of the activity.
Vacancies
The vacancy rate continues to drop, and overall asking lease rates are going up. Vacancies in the manufacturing-and-warehouse sector dropped 60 basis points year over year, ending the quarter at 3.2%. The vacancy rate within the research-and-development sector dropped 120 basis points year over year to 7.3%. The overall asking lease rate for industrial space in South Orange County is 84 cents per square foot, an increase of 7.7% from the first quarter of 2012.
Overall market fundamentals for the South Orange County retail market have been steadily improving. The market generated 16,800 square feet of positive net absorption in the first quarter. That represents a small drop in activity from the fourth quarter, but it’s the second consecutive quarter of positive absorption for the market.
The vacancy rate dropped to 5.1% from the 5.3% recorded at the end of 2012. The overall asking lease rate increased 4 cents per square foot from the previous quarter to stand at $2.49. The housing market continues to recover, the retail market should slowly follow.
Research and analysis provided by CBRE Research.
The Real Estate Watch Chart
Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
