Orange County industrial real estate market reports
The Orange County industrial market remains on firm footing as user demand continues to outpace available supply. With ecommerce growing at rapid pace and occupiers looking to perfect logistical channels, competition for any available industrial space remains robust, further propelling rental rates to new all-time highs as landlords capitalize on current market conditions. Additionally, solid leasing and demand fundamentals has driven investors to search for industrial opportunities and recently office opportunities for industrial redevelopments.
Just under 260K SF of industrial space was delivered in 1Q 2022 with over 2.2M SF under construction. The highly anticipated Goodman Logistics Center is on track to be delivered in 3Q 2022 and includes four state-of-the-art logistic facilities at a total of 1.5M SF.
Positive gains in net absorption continued in Orange County with over 321K SF in 1Q 2022. This makes it the 11th straight quarter of positive absorption and the second largest gain since the pandemic began in 1Q 2020 when the market reported over 1.0M SF of positive absorption.
Direct Asking Rent
Direct asking lease rates continue to spike across Orange County, concluding the quarter at $1.33/SF on a triple-net basis, an increase of 22.02% year-over-year.
Total available industrial space declined in 1Q 2022, falling by over 810K SF since 3Q 2020 to 5.9M SF market-wide.
Since the pandemic began 1Q 2020, direct vacancies have decreased by 80 basis points (bps) to 2.2%. At the end of the first quarter, 2.9M SF of direct space and 238K SF of sublease space remains vacant, respectively.
8 properties traded hands in 1Q 2022 at an average sales price of $291.42/SF. Although the number of sale transactions have decreased, it is not attributed to any lack of demand, and it is common for the beginning of the year to start off at a slower pace. In addition, underperforming office campuses as of late have been in high demand as developers look to redevelop these campuses into newer state-of-the-art logistic facilities.
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