The industrial market inSouthern California is suffering from a severe and well-documentedsupply shortage in the face increasing demand. In Orange County,however, the supply-demand balance in the small-box segment of themarket is healthier, with a higher 3% vacancy rate and moreopportunities for developers to bring new supply to the market.Still, this segment has also seen strong demand from users andincreasing rents as a result.

"There continues to be high demand for industrial buildingbetween 50,000-100,000 square feet in Orange County, vacancy ratesposting consistently in the 3% range and asking rental rates in thecounty increasing 8 percent over the past year," ChrisMigliori, EVP and principal at DAUM CommercialReal Estate Services, tells GlobeSt.com. "That said, muchof the existing inventory consists of smaller buildings under30,000 square feet, and developers who have been fortunate enoughto secure land would prefer to develop and deliver single tenantbuildings in the 200,000 square-foot-plus range.  Thecontributors for such development in that size range is lack ofinventory, cost of construction and the spike in Industrial Landprices in the past 36 months."

Migliori recently closed two industrial leases in thissize range, a 53,850-square-foot building leased by U-HaulInternational and a 47,813-square-foot building leased by LG HausysAmerica. Both buildings are owned by Panattoni DevelopmentCo. "Recognizing the current Industrial Market conditions,Panattoni elected to develop four buildings ranging from 47,813square feet to 69,882 square feet and selected DAUM as theexclusive listing agents," says Migliori. "The land purchase wasone of the last strawberry fields in North Orange County, thebuildings were constructed on a 10 acre site split between Anaheimand Placentia."