Available Industrial Space Shrinks to Record Low, New Report Says

ORANGE COUNTY, CA–The amount of available industrial space declined in all areas of the county between the second and third quarters of the year. A report by Voit Commercial Brokerage shows an overall availability rate of 5.42% in the last quarter, down from 6.52% in the previous quarter.

“It was a new record low on available property in the last 10 years,” says Jerry Holdner, report author and VP of market research for Voit. “South county has the biggest dip in available product in the past six months.”

Similar to the office market, Holdner notes that supply and demand for industrial space are in check. A lot of new product that came on the market during the period was absorbed with the increase in business startups and expansions thoughout the county.

Overall, the county has 7,800 buildings with 274 million sf of leasable space for manufacturing/distribution, R&D, and flex-tech combined. Another 3.5 million sf is currently under construction, with 8.8 million sf planned for the future.

The greatest amount of available manufacturing/distribution space lies in the north county area, with Anaheim leading the way with 1.9 million sf. The most available R&D and flex-tech space is in the John Wayne Airport area, especially in Irvine where there is 700,000 sf of both types of product. South county is also strong in the R&D and flex-tech market.

The most costly area for space is the south county area, where developers of manufacturing/distribution space are asking on average $97.57 per sf, and R&D space is going for $119.88 per sf. The airport area has the the second-highest rates, with manufacturing/distribution space going for on average $95.46 per sf, R&D for $86.51, and flex-tech at $186.23 per sf. R&D space is high in the west county as well, where asking prices average $107.73 per sf.

North county has the most new space planned–3.3 million sf–but nothing is presently under construction. Like most of the county, the majority of planned industrial buildings are in the 200,000- to 300,000-sf range. North county has 970,000 sf planned; south county, 450,000 sf; and the airport area, 444,000 sf. Most planned construction in the west county is in the 100,000- to 150,000-sf range.

“There’s some big stuff coming, but it’s wait and see for now,” Holdner says. “You have to go through the entitlement process before breaking ground. And, even after that whole process, demand could change so the product may never come up out of the ground.”

On the whole, five million sf of industrial space was leased in the county during the third quarter, and 2.3 million sf was sold.

“It was the second most active quarter of activity in the last five years,” Holdner continues. “Inventory is diminishing and activity has been really strong. If this trend continues, you will start seeing a lot of that planned product coming out of the ground.”

To request copies of the report, email Holdner at: [email protected]