Rents Continue To Rise, Construction On The Way


Orange County industrial market conditions remain at historically healthy levels. Although there is a strong demand for new industrial buildings, developers are challenged with finding available infill sites. Only 507,000 SF of new industrial product has been delivered during 2016, of which most has been preleased. Industrial product is expected to continue to deplete due to many properties being sold as land for multi-family redevelopment or converted to creative office space.


The industrial market has evolved to handle niche technology hub industries and specialty retail. The market is focused on smaller value-add manufacturing buildings that have a large R&D component. As such, rents for industrial space tend to be higher in Orange County compared to neighboring markets.

Key Takeaways:

  • Average asking rents continue to rise, up $0.02 per square foot (PSF) NNN (2.7%) over the previous quarter.

  • Industrial demand was positive with 381,300 square feet (SF) of net absorption recorded.

  • No new construction was delivered to the market during third quarter. There is currently 329,800 SF under construction.

  • The vacancy rate remains near historic lows at only 2.6%. Quality industrial space is increasingly hard to find in the Orange County industrial marketplace.

  • As market conditions remain tight and quality industrial space remains scarce, asking rental rates are expected to rise by another 3% to 4% by the start of 2017.


The Orange County industrial market continues to move forward with positive momentum. There are four industrial buildings under construction/renovation that are expected to be completed throughout 2017. With minimal increase in supply, asking rental rates are expected to continue to climb as we approach peak values of $0.78-$0.80 PSF NNN set in early 2008.