Orange County industrial real estate market reports

Q3 2021

Industrial rents in Orange County are among the highest of all major markets in the country well above neighboring Los Angeles and Inland Empire. Due to land being hard to come by, developers have resorted to buying old assets, a trend we expect to see continue. Speculative projects make up most of the new development.

6.0%

Economic conditions

  • Orange County unemployment is 6.0 percent as of August 2021 compared to 7.3 percent at the beginning of the year.
  • The economy has added back over 194,000 jobs since last year.
  • Orange County has experienced job gains in the transportation, warehousing & utilities sector up 10.6 percent over the last twelve months.
73 ships

Recovery rate

  • A record 73 cargo ships were waiting to enter the ports in September.
  • Over the past 12 months, the ports had its two highest-performing quarters and top four individual months in the Port’s 110-year history. 
15.2%

Industrial demand

  • Port volume traffic is on pace to increase 15.2 percent compared to last year.
  • With a 2.8 percent vacancy in Orange County, tenants in the market are unable to find space.
  • Net absorption through third quarter remains healthy. At 1 million sf through the third quarter of the year, aggregate 2021 net absorption is on a good pace to be equal to its annual historical average (1.5msf).
2.3msf

Industrial supply

  • During the third quarter, there were 14 properties 100,000 to 250,000 sf totaling 2.3 msf under construction and proposed, the most active size range by number of projects.
  • 53 percent of all available large blocks of space are in the 150,0000 – 250,000 sf size range.
42.0%

Pricing trends

  • Industrial sales volume surged 42.0 percent compared to the prior five-year average due to stronger fundamentals.
  • The average rental rate for Orange County has increased by 15.9 percent since the start of the pandemic.
$2.3B

Capital markets

  • Orange County industrial investment activity surged to $2.3B since 2020 as investors are attracted to local fundamentals largely benefitting from historic logistics demand.
  • Industrial pricing is translating to higher evaluations by investors as fundamentals remain strong. Orange County industrial assets, witnessed a 8.9 percent higher per-square-foot rate from April 2020 to September 2021.
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