IRVINE, CA—With ever-shrinking vacancy rates in both theoffice and industrial sectors ofOrange County, development is the next logicalstep. But Voit Real Estate Services' VP of marketresearch Jerry Holdner tells GlobeSt.com findingland to construct new buildings is a major challenge fordevelopers.

As GlobeSt.com reported last week, the Orange Countyoffice market showed continued signs of recovery in thethird quarter of 2014, posting just under 600,000 squarefeet of positive net absorption, and the county'sindustrial market showed significant positiveabsorption for the year with a two-cent or 3.2% increase in askinglease rates and drops in both vacancy and availability, accordingto Voit. And Holdner tells GlobeSt.com the office vacancy rate isat 12.5%, and 12% is the point at which the cranes typically comeout.

“The industrial vacancy rate is the lowest it's ever been,” saysHoldner. “I had to go back to the second quarter of '98 to find thesame amount of vacant space. We're going to probably see moreconstruction; the problem is finding sites tobuild these buildings. Most of the larger industrial sites havebeen converted to condominium high-rises. The demand is definitelythere, though, and once lease rates get high enough and it pencils,we'll see a lot of older buildings bought and scraped or justimproved.”