Real estate watch: West Orange County

HEADNOTE

Industrial Market Posts Strong Quarter

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Real Estate Watch: West Orange County

During

the second quarter of 2001, despite the relaxation of industrial activity, the West Orange County industrial market improved with a 21% increase in gross activity and the highest absorption in both the manufacturing-and-warehouse and research-and-development sectors among the OC submarkets. The overall industrial vacancy rate for West Orange County dropped to 1.2% in the second quarter, from 1.9% in the first.

Demand for larger, quality spaces in the industrial market fueled the absorption increase in the second quarter. West Orange County led the R&D market with 164,694 square feet of positive absorption, due to the execution of three lease or sale transactions for more than 30,000 square feet each. As a result, the vacancy rate for R&D space in West Orange County dropped to 3%, from 4.8% in the first quarter. The M&W market followed suit with the large space demand. Three leases and two sales for more than 40,000 square feet were signed in the second quarter, dropping the M&W vacancy down below 1%, and the availability rate below 5%.

Industrial sale activity for West Orange County increased 6% in the second quarter. Pushed by buyer demand, average asking sale prices jumped up to $92.35 per square foot, from $86.52 in the first quarter. Average asking lease rates in West Orange County have been on a steady incline over the past year, rising to a competitive level with the county average. In the second quarter, the overall industrial average asking rental rate rose to 62 cents per square foot per month, up 38% from the second quarter of last year.

West Orange County construction activity remained stable in the second quarter with continued development of the Woodwind Commerce Park, and R&D complex in Huntington Beach, four warehouse-distribution buildings for the Cypress Corporate park, and another at the Gothard Distribution Center in Huntington Beach. Combined, these buildings will add more than 420,000 square feet to the industrial market upon completion, which is anticipated by year-end.

AUTHOR_AFFILIATION

Analysis provided by CB Richard Ellis' Global Research and Consulting.