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ANAHEIM, CA-Occupancy is increasing in a number of Orange County industrial parks, primarily as a result of relatively small leases that are producing surprisingly steady activity in the midst of economic uncertainty. Seth Davenport, a vice president in the Anaheim Metro Office of Voit Commercial Brokerage, tells GlobeSt.com that in Yorba Linda the occupancy increased 7% in the second quarter of this year in the 105,600-sf North County Business Park owned by Chicago-based Walton Street Capital. Occupancy also increased 7% in the second quarter for a year-to-date increase of 13% at Walton Street’s 110,000-sf Fullerton Business Center.

Davenport is part of a Voit team including Louis Tomaselli, Mitch Zehner, Hayden Socci and Mike Boomer that represents Walton Street on the North Orange County industrial properties. Voit has a unique window into the industrial leasing world in Orange County because, as GlobeSt.com reported earlier this year, the company handles leasing for 19 business parks in Orange County totaling more than 3.3 million sf that are owned by Walton Street.

Davenport tells GlobeSt.com that much of the industrial leasing in Orange County is in deals ranging from about 1,000 sf to 5,000 sf, often with existing tenants taking more space in the same industrial park or signing short-term renewals. He cites a number of reasons for the trend, which contrasts somewhat from conditions before the credit crunch and the economic downturn, when small business owners were buying industrial buildings seemingly as fast as developers could build them.

Some of the tenants who are signing are would-be buyers, and Davenport says that one of the reasons that some business owners are leasing rather than buying is that they want to preserve capital to run their companies. “Business owners are very cash-conscious now, and their thinking is that rather than put a certain amount of capital into buying a building, they are better off putting the money into their business,” he explains.

Another reason that tenants opt to continue leasing is the uncertain economic climate. “A lot of businesses want to see what happens with the economy before they make a decision to move or to expand to a completely new location,” Davenport says. That reluctance means a lot more renewals.

Tenants who want to renew for a short term are finding it easier to do now because landlords have become more flexible on that point, Davenport notes. Building owners today are more willing to sign renewals for less than a five-year term, and many tenants want terms shorter than five years because they anticipate that they may need to make another leasing decision within a couple of years, he explains.

The increased leasing is reflected in the overall activity in Orange County’s industrial market during the second quarter. As reported last month on GlobeSt.com, Voit’s second-quarter market report showed that activity climbed to 3.3 million sf from 2.5 million sf in the first quarter. Over the past eight years, activity has averaged about four million sf per quarter, according to Voit statistics.

Overall vacancy stood at 4.36% in the second quarter, with the lowest vacancy rate in n North Orange County, 3.68%. The Voit report noted that the county’s industrial market remains robust, with asking rates at a record-high 80 cents per sf per month.

As Davenport points out, the figures translate into increased occupancy for business park owners. At Walton Street’s Fullerton Business Center, for example, the Voit team is working on deals that are expected to soon bring the 110,000-sf industrial park to 100% occupancy.

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