Hardly any development has been in the pipeline in the West Orange County industrial market, and with a dropping vacancy rate, lease rates have steadily ticked up over the past 12 months.
First-quarter activity in the submarket was on par with the fourth quarter, though net absorption figures dropped slightly.
The market consists of 35.8 million square feet of manufacturing and warehouse space and nearly 5.2 million square feet of research and development products. It historically has held a low vacancy rate, with all of the quality space occupied.
Gross lease transactions and user sales in the first quarter equated to 565,797 square feet, a slight increase over the 551,205 square feet of gross activity recorded in the fourth quarter.
Net absorption was negative, however, ending the first quarter at negative 37,106 square feet. The vacancy rate as a result ticked up slightly to 2.4% from 2.3% in the fourth quarter.
The average asking lease rate increased 8.2% year-over-year to 66 cents per square foot at the end of the quarter.
The manufacturing and warehouse sector ended the quarter at 59 cents per square foot, a 3.5% increase over the fourth quarter, and the research and development sector ended at 85 cents per square foot, a 13.3% increase year-over-year.
Two buildings broke ground during the first quarter in Huntington Beach. They total 144,754 square feet and are scheduled to be delivered to the market toward the end of the year.
Aliso Viejo-based Shea Properties is developing the Shea Center Huntington Beach industrial center on 6.5 acres that formerly was home to Randall Lumber Co.
The development activity is the first in the West Orange County submarket since the second quarter of 2008.
Data and analysis are provided by CBRE Research
