The industrial market in West Orange County seems finally to have hit bottom.
Space continues to tighten with a West OC industry vacancy rate of 3% at the end of the second quarter. The vacancy rate for the manufacturing and warehouse submarket decreased to 2.5% in the second quarter, when the average lease rate for manufacturing and warehouse space remained constant at 53 cents per square foot.
There has been an uptick in lease and sale activity among small to midsize companies. There is also a limited supply of class A space, so a rise in lease rates and sale prices appears likely amid a flight to quality from class B to class A buildings.
A recent Chapman University economic research report indicated consumers are gaining confidence in the economy and are spending more on big-ticket items. The industrial market may not be far behind.
Production and new orders are expected to increase at a much higher rate, especially in the strong aerospace industry. Increased consumer spending should spur hiring and restocking of inventories, and such developments would prompt hire demand for industrial space.
There’s been no new industrial space added to the West OC market since the third quarter of 2008.
Manufacturing and warehouse space accounts for more than 87% of its industrial space, with a base of more than 40.3 million square feet.
Goodmanson is a senior vice president in the Newport Beach office of CBRE Group Inc.
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