The following reflects Orange County industrial market conditions as of Q2 2026.
MARKET DRIVERS
Orange County’s industrial market showed early signs of stabilization in the second quarter, suggesting the extended period of softening conditions may be nearing an end. Leasing activity picked up during the quarter, driven in part by tenants actively searching for new space rather than simply renewing in place, a shift that could support a return to positive net absorption in future quarters.
As a result, many landlords are turning to “blend-and-extend” strategies, resetting below-market in-place rents closer to current levels in exchange for longer lease commitments rather than risking vacancy. As owners continue adjusting to current conditions, asking rents are expected to see further modest declines, though shrinking concession packages that were previously needed to attract tenants may help offset some of that softness.
Overall, deal activity appears increasingly rate-driven, which should support greater market stability going forward.
ECONOMIC REVIEW
Orange County’s economy remains fundamentally healthy, anchored by a diverse employment base and continued growth in high-value industries such as life sciences, technology, healthcare, and aerospace. A highly skilled workforce, strong household incomes, and one of the lowest unemployment rates in California continue to support the local economy, even as growth has cooled from the rapid pace seen after the pandemic.
Elevated housing costs, slower job growth, and ongoing interest rate uncertainty have tempered business expansion and investment activity. Even so, overall economic conditions remain favorable for commercial real estate demand. Steady employment levels, a diversified economy, and improving business confidence should provide a solid foundation for continued stability, though growth is expected to remain measured in the near term.
NEAR-TERM OUTLOOK
Orange County’s industrial market is well positioned to navigate the next phase of the economic cycle, with a healthy supply of available space serving both logistics users and advanced manufacturing occupiers. Disciplined new construction has helped prevent an oversupply that could otherwise place significant downward pressure on property values.
While leasing activity and rental rates may continue to face headwinds in the near term, strong underlying fundamentals should help support asset values and limit downside risk even if the anticipated recovery takes longer to materialize. As broader economic and geopolitical uncertainties subside and confidence improves, Kidder Mathews expects business expansion, leasing activity, and overall market conditions to strengthen, positioning Orange County’s industrial sector for renewed growth.
Frequently Asked Questions
What is the industrial vacancy rate in Orange County in Q2 2026?
Orange County’s direct industrial vacancy rate reached 6.0% in Q2 2026, up from 5.8% in the prior quarter and 5.1% a year earlier, an increase of about 18.4% year-over-year, according to Kidder Mathews research. Despite the increase, vacancy remains below many competing Southern California industrial markets. (Data source: CoStar)
How does availability compare to vacancy in the Orange County industrial market this quarter?
Total availability climbed to 9.2% in Q2 2026, up from 8.6% in Q1 2026 and 8.3% a year earlier, according to Kidder Mathews research. The gap between availability and direct vacancy reflects space being marketed ahead of expiration or for sublease that isn’t yet physically vacant. (Data source: CoStar)
What are average industrial asking rents in Orange County in Q2 2026?
Average asking rents across Orange County’s industrial market were $1.45 per square foot per month on an NNN basis in Q2 2026, down 5.2% year-over-year from $1.53, according to Kidder Mathews research. Submarket rates vary widely, from roughly $1.09 in Costa Mesa to more than $2.00 in smaller South County submarkets such as Dana Point/San Juan/San Clemente. (Data source: CoStar)
How much industrial leasing activity occurred in Orange County in Q2 2026?
Industrial lease transactions totaled 2,287,130 SF in Q2 2026, bringing year-to-date leasing activity to 5,601,046 SF, according to Kidder Mathews research. That YTD figure is down 49.1% from the 11,003,828 SF leased over the same period in 2025, reflecting a slower overall pace of deal-making even as quarterly activity picked up. (Data source: CoStar)
Is net absorption positive or negative in the Orange County industrial market?
Net absorption was negative 331,166 SF in Q2 2026, meaning tenants vacated more space than they occupied during the quarter, according to Kidder Mathews research. Year-to-date net absorption of negative 173,987 SF still marks a significant improvement over the negative 1,406,261 SF recorded through the same period in 2025. (Data source: CoStar)
What is the industrial construction pipeline in Orange County?
Orange County saw roughly 287,000 SF of new industrial deliveries in Q2 2026, according to Kidder Mathews research. Active projects underway include the 261,707-SF Huntington Gateway in West County, expected to deliver in March 2027, and the 201,645-SF South Coast Technology Center in the Airport Area, expected in August 2026, among others. (Data source: CoStar)
What was the largest industrial sale in Orange County in Q2 2026?
The largest industrial sale of Q2 2026 was Kurv Irvine II in the South County submarket, a 348,230-SF building that sold for $107,000,000, or $307.27 per square foot, according to Kidder Mathews research. Kurv Industrial acquired the property from LBA Logistics. (Data source: CoStar)
What was the largest industrial lease signed in Orange County in Q2 2026?
The largest lease signed in Q2 2026 was Harbor Distributing’s 223,406-SF lease at 5600 Argosy Cir in West County, executed in May 2026 with landlord Sares-Regis Group, according to Kidder Mathews research. (Data source: CoStar)
What is the outlook for the Orange County industrial market?
Kidder Mathews expects Orange County’s industrial market to gradually strengthen as broader economic and geopolitical uncertainty subsides and business confidence improves. Disciplined new construction has kept supply in check, which should help support asset values even if rents face near-term pressure and demand recovery takes longer than expected. (Data source: CoStar)
Last updated: Q2 2026. Data source: EDD, CoStar. Compiled by the Kidder Mathews Research Group.
Q2 2026 Orange County Industrial Market: Key Data Points
Explore our full Orange County industrial market review for deeper insights into leasing trends, sale activity, and submarket performance.
- Industrial Vacancy Remains Low: Orange County’s direct industrial vacancy rate measured 6.0% in Q2 2026, remaining below many major Southern California industrial markets despite increasing availability.
- Leasing Activity Accelerates: Industrial lease transactions totaled 5.6M SF year-to-date, with growing tenant demand contributing to improved market momentum and increased site search activity.
- Net Absorption Improves Significantly: Net absorption registered negative 173,987 SF year-to-date, a substantial improvement from the negative 1.4M SF recorded during the same period last year.
- Asking Rents Moderate from Peak Levels: Average asking rents measured $1.45 PSF NNN per month, down 5.2% year-over-year as landlords adjust pricing to current market conditions.
- Limited New Supply Supports Fundamentals: New industrial deliveries totaled just 287K SF during Q2, helping prevent oversupply and preserve long-term market balance.
- Availability Rate Remains Elevated: The availability rate reached 9.2%, providing tenants with more options while creating opportunities for future absorption as leasing demand strengthens.
Submarket Statistics
| Submarket | Total Inventory (SF) |
Direct Vacancy Rate |
Total Vacancy Rate |
Total Available Rate |
2Q26 Direct Net Absorption (SF) |
YTD Direct Net Absorption (SF) |
2Q26 Total Leasing Activity (SF) |
Average Direct Rental Rate (NNN) |
|---|
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | Total Available Rate | 2Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | 2Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|---|
| Costa Mesa | 7,565,925 | 3.4% | 3.4% | 4.9% | 15,759 | 69,697 | 62,946 | $1.09 |
| Fountain Valley | 3,594,443 | 0.7% | 5.6% | 10.0% | 15,365 | -13,038 | 5,256 | $1.36 |
| Irvine | 11,836,060 | 9.7% | 12.9% | 13.3% | -96,787 | -80,675 | 202,068 | $1.59 |
| Newport Beach | 390,118 | 0.0% | 0.0% | 0.0% | 0 | 0 | 0 | $0.00 |
| Santa Ana | 30,789,609 | 3.6% | 4.5% | 5.2% | -45,434 | 398,730 | 279,368 | $1.33 |
| Tustin | 5,144,371 | 9.4% | 10.3% | 10.7% | -128,799 | -114,140 | 22,660 | $1.78 |
| Airport Area | 59,320,526 | 5.1% | 6.6% | 7.5% | -239,896 | 260,574 | 572,298 | $1.44 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | Total Available Rate | 2Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | 2Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|---|
| Anaheim | 45,158,562 | 6.2% | 6.7% | 8.9% | 40,782 | -78,886 | 398,151 | $1.48 |
| Brea/La Habra | 15,635,763 | 3.8% | 5.1% | 7.8% | -86,471 | -15,689 | 46,334 | $1.36 |
| Buena Park | 13,168,376 | 8.7% | 9.5% | 22.5% | 6,920 | -130,456 | 38,368 | $1.39 |
| Fullerton | 19,497,604 | 5.1% | 7.3% | 7.8% | 197,782 | 75,451 | 306,080 | $1.43 |
| Orange | 13,371,149 | 3.8% | 4.1% | 7.1% | 5,186 | 45,756 | 69,810 | $1.29 |
| Placentia/Yorba Linda | 4,944,178 | 3.3% | 3.3% | 6.0% | -98,869 | -78,045 | 2,250 | $1.38 |
| North County | 111,775,632 | 5.6% | 6.4% | 9.8% | 65,330 | -181,869 | 860,993 | $1.41 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | Total Available Rate | 2Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | 2Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|---|
| Irvine Spectrum | 11,149,317 | 13.9% | 13.9% | 15.5% | 58,403 | 18,232 | 186,240 | $1.74 |
| Laguna Hills/Aliso Viejo | 1,854,471 | 4.0% | 4.0% | 3.2% | -33,417 | -26,910 | 51,397 | $1.67 |
| Laguna Niguel/Laguna Beach | 295,465 | 3.2% | 3.6% | 3.5% | -2,953 | -5,098 | 0 | $2.75 |
| Lake Forest/Foothill Ranch | 7,420,999 | 5.1% | 5.6% | 7.6% | -145,032 | -164,857 | 25,290 | $1.54 |
| Mission Viejo | 748,218 | 1.5% | 1.5% | 2.6% | -2,490 | -2,490 | 919 | $1.79 |
| RSM/CDC/Ladera Ranch | 1,925,685 | 2.8% | 2.8% | 2.6% | 2,923 | 7,910 | 1,800 | $1.66 |
| Dana Point/San Juan/San Clemente | 3,013,199 | 7.5% | 7.5% | 14.9% | 44,378 | 14,196 | 11,178 | $2.05 |
| South County | 26,407,354 | 8.7% | 8.9% | 10.9% | -78,188 | -159,017 | 276,824 | $1.70 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | Total Available Rate | 2Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | 2Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|---|
| Cypress | 4,829,980 | 20.0% | 20.8% | 21.8% | -118,413 | -110,424 | 125,962 | $1.41 |
| Garden Grove | 12,257,511 | 5.3% | 5.6% | 7.0% | -66,765 | -115,982 | 49,990 | $1.32 |
| Huntington Beach | 14,172,767 | 3.7% | 3.7% | 6.3% | 4,502 | 26,995 | 379,911 | $1.54 |
| La Palma | 1,785,908 | 27.8% | 27.8% | 23.8% | 0 | 0 | 0 | $1.15 |
| Los Alamitos/Stanton | 3,828,128 | 1.0% | 1.3% | 1.4% | 23,247 | -2,693 | 17,012 | $1.60 |
| Seal Beach | 941,679 | 0.0% | 0.0% | 0.0% | 0 | 0 | 0 | $0.00 |
| Westminster | 2,339,892 | 6.2% | 6.2% | 9.7% | 79,017 | 108,429 | 4,140 | $1.37 |
| West County | 40,155,865 | 7.0% | 7.3% | 8.7% | -78,412 | -93,675 | 577,015 | $1.35 |
| Building Size | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | Total Available Rate | 2Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | 2Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|---|
| 5,000 – 9,999 SF | 17,232,880 | 1.8% | 1.9% | 2.8% | 15,471 | -4,050 | 118,473 | $1.63 |
| 10,000 – 24,999 SF | 60,628,751 | 3.1% | 3.4% | 4.8% | -274,301 | -336,751 | 579,009 | $1.56 |
| 25,000 – 49,999 SF | 41,900,197 | 3.5% | 3.9% | 5.5% | 130,333 | 273,276 | 258,129 | $1.39 |
| 50,000 – 99,999 SF | 37,646,724 | 5.6% | 6.1% | 8.4% | -137,644 | -116,598 | 302,037 | $1.46 |
| 100,000 – 249,999 SF | 48,520,872 | 12.5% | 14.0% | 15.1% | -75,181 | -89,390 | 806,076 | $1.45 |
| 250,000+ SF | 31,976,371 | 7.8% | 10.4% | 17.7% | 10,156 | 99,526 | 223,406 | $1.42 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | Total Available Rate | 2Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | 2Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|---|
| Orange County Total | 237,905,795 | 6.0% | 6.9% | 9.2% | -331,166 | -173,987 | 2,287,130 | $1.45 |
Data as of Q2 2026. Source: EDD, CoStar. Prepared by the Kidder Mathews Research Group.
Significant Sale Transactions 2Q 2026
| Property | Submarket | SF | Sale Price | $/SF | Buyer | Seller |
|---|---|---|---|---|---|---|
| Kurv Irvine II | South County | 348,230 | $107,000,000 | $307.27 | Kurv Industrial | LBA Logistics |
| Yorba Linda Commerce Ctr (12 Bldgs) | North County | 280,661 | $80,976,500 | $288.52 | Farallon Capital Mgmt. | Cashman Family Ltd Partnership |
| 27717 Aliso Creek Rd | South County | 93,750 | $41,052,632 | $437.89 | Greenlaw Partners | PepsiCo, Inc. |
| Irvine Business Complex | Airport Area | 260,850 | $32,000,000 | $122.68 | Starpointe Ventures | Alston Team |
| 2350-2384 E Orangethorpe Ave | North County | 62,395 | $18,700,000 | $299.70 | Guthrie Dev. Co. | JR Family Properties, Inc. |
| 423-424 Berry Way | North County | 101,380 | $16,514,500 | $162.90 | Transwestern Dev. Co. | Rexford Industrial Realty |
Significant Lease Transactions 2Q 2026
| Property | Submarket | SF | Transaction Date | Landlord | Tenant |
|---|---|---|---|---|---|
| 5600 Argosy Cir | West County | 223,406 | May 2026 | Sares-Regis Group | Harbor Distributing |
| 14101 Alton Pky | South County | 176,640 | April 2026 | Cardinal Development Co. | KYOCERA Document Solutions |
| 691 Burning Tree Rd | North County | 156,096 | April 2026 | DWS | Columbia Container Lines |
| 500 W Warner Ave | Airport Area | 132,503 | April 2026 | LBA Realty/Blackstone/GIC | Cubework |
| 11251 Warland Dr | West County | 121,983 | June 2026 | Cypress Land Co. | Manhattan Beachwear Inc. |
| 5600 Argosy Cir | West County | 101,618 | June 2026 | Sares-Regis Group | Fritz Williams |
| 27717 Aliso Creek Rd | South County | 93,750 | April 2026 | Greenlaw Partners | PepsiCo, Inc. |
Significant Under Construction
| Property | Address | Submarket | SF | Owner | Delivery |
|---|---|---|---|---|---|
| Huntington Gateway | 5055 Skylab Ln + 14393 Skybolt Ln | West County | 261,707 | Sares Regis Group | March 2027 |
| South Coast Technology Ctr | 3100–3120 W Lake Center Dr | Airport Area | 201,645 | CJ Segerstrom & Sons | August 2026 |
| Goodman Commerce Ctr | 5665 Plaza Dr | Cypress | 191,894 | Goodman North America | July 2027 |
| Amazon Distribution | 625 N Grand Ave | Airport Area | 112,500 | Amazon | March 2027 |
| 11311 Western Ave | 11311 Western Ave | West County | 88,164 | Scannell Properties | July 2026 |
| Advantech | Red Hill Ave & Victory Blvd | Airport Area | 78,837 | SOC Community College District | June 2026 |
Data as of Q2 2026. Source: EDD, CoStar. Prepared by the Kidder Mathews Research Group.
ContactGARY BARAGONA |
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