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Market Report

Orange County Industrial

Second Half 2019

Vacancy Trends Upward Yet Conditions Remain Tight; Investors Seek Discounted Pricing, Upside Potential

 

Strong demand for larger facilities bodes well for Orange County following a consortium of sizable move-outs. A regionally central location and proximity to several major ports continued to attract growing logistics companies to the metro over the past year ending in September, driving demand for warehouses. Tenant competition for properties with a sizable footprint was high as the market’s inventory of larger-scale buildings is smaller than neighboring Los Angeles and Riverside-San Bernardino. This summer, IDC Logistics occupied a 450,000-square-foot facility in Buena Park, while Quiet Logistics moved into a similar building in La Palma. These leases and Albertsons’ decision to occupy a distribution center in Irvine Spectrum has held overall vacancy below 4 percent throughout this year, offsetting a collection of recent move-outs that included the closure of a 1.1 million-square-foot J.C. Penney facility in Buena Park. While tight conditions persist, a triple-digit rise in vacancy occurred over the past year, with North County recording the most notable increase. Supply additions did not play a role in the recent uptick in available space, as less than 300,000 square feet was finalized during the first three quarters of 2019.

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