JLL: Mfg. Recovery to Tighten Industrial

IRVINE, CA-As industrial vacancies continue to tighten, with the potential to dip below the lows of 3.8% reached in the late 1990s and early 2000, growth in the high-tech manufacturing sector could bring this number even lower, Jeff Ingham, senior managing director for Jones Lang LaSalle, tells GlobeSt.com. As we reported earlier this week, the firm's research shows that after more than a decade of steadily declining numbers, the high-tech manufacturing sector nationwide is beginning to add jobs again.

According to a white paper from JLL, the statistic of total high-tech manufacturing employment in the US now stands at just over 1 million, with L.A. the second-largest employment base for this area of industrial. “L.A. includes the OC, and thus if manufacturing continues to expand, that will drive vacancies even lower than [the predicted 3.8%] since until 2013 the majority of all new industrial leasing was warehouse and distribution based,” Ingham says.

In May, two large manufacturing leases were signed in Orange County, one by Glenair for 205,000 square feet in Anaheim and one by Cavotec for 160,000 square feet in Cypress, as GlobeSt.com previously reported. “These two leases are important to note because they are expansions of manufacturing in the OC and are true organic growth within the OC,” says Ingham. “Together, they will bring over 450 jobs to the OC.”

JLL's OC team is tracking a number of other large manufacturing firms in the market with expansion-space requirements, including Amcor-Sunclips, Massimo Medical, Accurate Metal Solutions and LRG Apparel. “The majority of the larger vacant space in the OC now is in West Orange County, Cypress and Huntington Beach, so I think those markets have the most to gain by new firms locating in those vacancies,” Ingham says. “Anaheim has the largest industrial base in the entire County of Orange and is able to offer enterprise-zone economic benefits and lower City of Anaheim power utility costs (typically 6% to 15% less than Southern California Edison), so Anaheim will be a great beneficiary of increases in manufacturing in SoCal as well.”

Ingham adds that from a high-technology perspective, the Irvine Spectrum is the choice for many of those name firms, so the Irvine Co. should benefit greatly from any increase in manufacturing.