The local research and development segment posted a mixed third quarter, with more vacancies but also higher lease rates.
There are 1,108 buildings and more than 43 million square feet of space in Orange County’s research and development market, representing 17% of the total industrial space in the county.
The majority of that space is in the Greater Airport and South OC areas, which account for 28.3 million square feet and more than 65% of the total market space. North OC is the third-largest submarket with more than 9.7 million square feet of space. West OC, with almost 5 million square feet of inventory, is the smallest submarket.
OC’s research and development properties had 255,322 square feet of gross activity absorption in the third quarter, down from the 610,400 square feet of gross activity recorded in the second quarter. The market had 81,372 square feet of negative absorption, as the vacancy rate ticked upward to 5.9% from 5.7% in the second quarter.
Average asking lease rates for research and development have begun to increase. Asking rents for the county, on average, were up 2 cents from the previous quarter and currently stand at $0.81 per square foot.
The third quarter’s average lease rates range from a low of 59 cents per square foot in North OC to a high of 92 cents per square foot in South OC.
There is little construction taking place across all product types in the county. So relocating companies will continue to look to existing newer projects that offer a strategic advantage to facilitate growth in the coming years.
Black is a senior associate in the Newport Beach office of CBRE Group Inc.
The Real Estate Watch Chart
Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
