Demand Surge Drives County’s Vacancy Rate To 2.5%
Demand for industrial space surged in the third quarter, driving the amount of available space down further into record territory. The Q3 vacancy rate fell to 2.5%.
Net absorption totaled 744,306 sq. ft. as inventories tightened countywide.
The average triple-net lease rate ticked up to 84 cents per sq. ft. in Q3 and is up more than 10% from a year ago. The last time rents were as high was 2008 and the vacancy rate was 4.4%.
Not surprisingly, some landlords of premium space are hiking the automatic annual rent increase to 4% from 3%, which has been the boilerplate standard since before the recession. Orange County industrial owners and landlords have enjoyed a healthy run in the last six years during which 21 million sq. ft. have been absorbed and average rents have climbed more than 35%.
The Q3 totals represent the year’s first quarterly absorption gain, and erase concerns, for the moment, of whether economic uncertainty was sowing caution in the market. But business owners whose growth plans are being frustrated by few real estate choices see risks in postponing expansion.
Other than roughly 2.5 million sq. ft of new and planned industrial buildings in Anaheim and Fullerton, the county’s 278 million-sq.-ft. industrial base will remain relatively unchanged because so little land is available for new development.
The most activity in the third quarter was in the South County submarket, which posted 248,856 sq. ft. of positive net absorption for its first net gain since the end of 2015. The vacancy rate fell to 3.1% from 3.7% and the average lease rate jumped to $1.11, which was up 13% year over year.
In the North County submarket – the county’s largest with 42% of the total inventory – the vacancy rate fell from 2.1% to 1.9% on 236,649 sq. ft. of net absorption. It was North County’s sixth straight quarter of positive absorption.
Net absorption in the Airport submarket gained 157,163 sq. ft. in Q3 and its vacancy rate fell to 3.1% from 3.8% after putting nearly 580,000 sq. ft. back on the market in the second quarter.
West County’s vacancy rate fell to 2.5% on 101,638 sq. ft. of net absorption.
Click here to read the full report.
Net absorption totaled 744,306 sq. ft. as inventories tightened countywide.
The average triple-net lease rate ticked up to 84 cents per sq. ft. in Q3 and is up more than 10% from a year ago. The last time rents were as high was 2008 and the vacancy rate was 4.4%.
Not surprisingly, some landlords of premium space are hiking the automatic annual rent increase to 4% from 3%, which has been the boilerplate standard since before the recession. Orange County industrial owners and landlords have enjoyed a healthy run in the last six years during which 21 million sq. ft. have been absorbed and average rents have climbed more than 35%.
The Q3 totals represent the year’s first quarterly absorption gain, and erase concerns, for the moment, of whether economic uncertainty was sowing caution in the market. But business owners whose growth plans are being frustrated by few real estate choices see risks in postponing expansion.
Other than roughly 2.5 million sq. ft of new and planned industrial buildings in Anaheim and Fullerton, the county’s 278 million-sq.-ft. industrial base will remain relatively unchanged because so little land is available for new development.
The most activity in the third quarter was in the South County submarket, which posted 248,856 sq. ft. of positive net absorption for its first net gain since the end of 2015. The vacancy rate fell to 3.1% from 3.7% and the average lease rate jumped to $1.11, which was up 13% year over year.
In the North County submarket – the county’s largest with 42% of the total inventory – the vacancy rate fell from 2.1% to 1.9% on 236,649 sq. ft. of net absorption. It was North County’s sixth straight quarter of positive absorption.
Net absorption in the Airport submarket gained 157,163 sq. ft. in Q3 and its vacancy rate fell to 3.1% from 3.8% after putting nearly 580,000 sq. ft. back on the market in the second quarter.
West County’s vacancy rate fell to 2.5% on 101,638 sq. ft. of net absorption.
Click here to read the full report.
Posts
COMMENTS