Absorption Dropped Below A Million SF
- The vacancy rate in Orange County increased by 100 basis points to 3.8% during the first quarter. Vacancy stood at 2.6% one year ago.
- Asking rental rates increased 8.0% from one year ago to $0.94 per square foot (PSF) triple net (NNN).
- Industrial demand dropped to under 1.18 million square feet of net absorption. Much of this negative demand was concentrated in the North County submarket.
- The Orange County Commerce Center in Anaheim was delivered to the market totaling 232,400 square feet, leaving 100,300 square feet under construction.
- Orange County job growth increased by 11,400 jobs compared to one year ago, a growth of 0.7%. The Orange County unemployment rate is still among the lowest in the nation at 3.0%.
The Orange County industrial market closed the first quarter with net absorption recording negative 1.18 million square feet. Much of this negative movement stemmed from the North County submarket as J.C. Penney Company moved out of 1.1 million square feet in Buena Park. This is the lowest amount of absorption seen since the second quarter of 2009.
Despite the increase in availability, tenants are struggling to find future space options to meet their needs given the lack of available inventory.
Demand remains strong for larger e-commerce companies. The pace of online retail sales growth has not slowed and will continue for the foreseeable future as consumer preferences continue to evolve. As internet retail continues to grow, so too will the need for supporting industrial space.