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7/17/20
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Here’s a quick second quarter 2020 ending overview of Orange County’s industrial market, provided to us by CBRE
Vacancy Rate:
2.2%
Net Absorption:
(616,861) SF
Construction:
870,595 SF
Lease Rate:
$1.03 NNN
Unemployment:
14.5%
HIGHLIGHTS
• Despite the 50-bp (basis points) increase from Q1 2020, vacancy remained 10-bps below Q2 2019 ending Q2 2020 at 2.3%. The increase in vacancy was mostly driven by move-outs in North Orange County, more specifically Buena Park and Fullerton.
• The 500k sf Shea Business Center in Santa Ana completed construction in Q2 2020 bringing much needed new inventory to the supply-restricted market. The new, state-of-the-art buildings have garnered a lot of interest and one 72k sf building has already been leased to Anduril Industries.
• The average asking lease rate increased 9.6% from Q2 2019 and 3.0% from Q1 2020 to $1.03 per sq. ft. The push in the average asking lease rate was driven primarily by more R&D/Flex product coming online, increasing the average asking rate for R&D/Flex product by 5.7% quarter over quarter. The R&D/Flex availability rate increased 50 bps from Q1 2020.
• Short-term deals and renewals were a popular choice among tenants as they navigated the uncertainty of the market. Renewals were approximately 36% of total activity and the average lease term dropped 14% quarter over quarter from 57 months to 49 months.
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