OC Industrial Rents Bump 10% in 2017

Orange County is—nearly—leading the Southern California market for industrial rent growth. Second to the Inland Empire, which saw a 20% increase industrial rents, Orange County saw a 10.4% increase in industrial rents, according to research from NAI Capital. The bump beat out Los Angeles, up 7.9%, and Ventura County, up 3.4%, and made the Orange County market the top infill market for industrial rate growth.

“Lack of available land and lack of inventory is pushing the prices,” David Knowlton, EVP at NAI Capital, tells GlobeSt.com. “The economy is doing well, and all of the people that I speak to—developers mainly—are bullish for the next couple of years, which is as far out as I think any one cares to go. So, the spigot is turned on and there is a lot of money looking for impossible to find land, but we are fully built out. That is really driving the increase in pricing and lease rates. It is really a question of supply and demand. When you have a sub 3% vacancy rate with very little construction in the pipeline, it is forcing pricing up.”

While ecommerce users are driving demand in the Inland Empire market, Knowlton says that there is a more dynamic mix of users in Orange County. Tenants driving the demand range from manufacturing users to warehouse distributors. “It is more dynamic,” Knowlton explains. “The ecommerce players are primarily running along the freeways and in the Inland Empire, which is the only place that you can get anything north of 500,000 square feet. Here, we are seeing a diverse group that is building on itself. We are feeding on ourselves here, and anyone coming inbound to Orange County is coming from the South Bay and Los Angeles County.”