IRVINE, CA-Voit Real Estate Services reports that the Orange County industrial market took significant strides toward continued recovery in 2013. The sector saw notable positive absorption for the year, a 4-cent or 7% increase in asking lease rates and drops in both vacancy and availability.
Both vacancy and availability continued trending downward throughout 2013, with vacancy ending the fourth quarter of 2013 at 4.45%, the lowest rate in five years and a drop of nearly 10% from fourth-quarter 2012, and availability posting a rate of 6.27% at the close of the year, the lowest rate in 23 quarters and a substantial decrease of more than 18% from 2012.
According to Jerry Holdner, VP of market research for Voit, “Overall in the Orange County industrial market over the last two years, vacancy has reduced over 15%, while availability has decreased a jaw-dropping 28%. The substantial decreases in vacancy and availability are contributing to the gains in asking lease rates.”
Holdner adds that as lease rates rise, sale prices are also ticking up. He attributes this trend to the diminishing supply of industrial product for sale in Orange County, particularly in buildings smaller than 100,000 square feet.
“Currently, only around 2% of the inventory in the Orange County industrial market is available for sale. This lack of supply will continue to place upward pressure on pricing going forward. We anticipate more build-to-suit and speculative development emerging in 2014.”
Holdner adds that overall, the firm continues to be cautiously optimistic about the Orange County office and industrial markets. “We continue to see improvement in both [markets], and we anticipate positive gains moving forward, provided job creation continues and consumer confidence stabilizes.”
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