The research and development market in Orange County had 70,240 square feet of negative absorption in the fourth quarter, but it remained tight with a vacancy rate of 3%.
South Orange County represented almost all of the negative net absorption for the quarter, with 117,538 square feet. South OC, conversely, was the only submarket that had positive net absorption in the third quarter. The fourth-quarter decrease was due to a few larger users that left the submarket.
Significant Deal
Overall, the Orange County research and development market generated 226,276 square feet of gross activity in the fourth quarter.
One of the most significant lease transactions in the sector was Earth Friendly Products, which leased 124,894 square feet in Cypress.
The research and development market had a 3% vacancy rate at the end of the quarter, reflecting a 3.4% increase from the prior quarter and a 14.3% decrease year-over-year.
The Airport Area and West Orange County had the lowest vacancy rates in the quarter at 2.4% and 2%, respectively.
The South OC submarket led the county with a 4.3% vacancy rate.
Consistently low vacancy rates have continued to push asking rates throughout the market. The third and fourth quarters, though, remained constant at an 89-cent-per-square-foot average asking rate.
Asking Rates
The South Orange County submarket remained the premier location for research and development space, with an average asking rate of 99 cents per square foot.
The entire county has seen a decrease in average asking rates year-over-year, declining from 93 cents per square foot to 89 cents, or a 4.3% decrease.
Landlords, though, are expected to raise asking rates through this year and charge a premium for quality space due to no research and development space under construction and rising user demand.
Carter Haslam is an associate analyst at CBRE.
