THE ORANGE COUNTY industrial market remained on firm footing once again as direct vacancy rates decreased by 15% Y-O-Y, concluding at 2.5%. A driving force behind expansion efforts is a result of 3PL and ecommerce companies looking to perfect their logistics channels as ecommerce sales continue to accelerate.
LEASING ACTIVITY declined 22% Y-O-Y to 12.3 million square feet in 2020. Although, smaller tenants between 10,000 and 25,000 square feet have been affected the most as a result of Covid-19, over 2.7 million square feet was leased by year end. This can be correlated to many tenants relocating to smaller properties as they adjust their business operations.
WITH MINIMAL vacancies and leasing activity remaining steady, direct lease rates have continued to grow, increasing by 3% from the year prior to $1.01 market wide.
As of November 2020, the unemployment rate was at 6.4%, 90 basis points (bps) lower from the month prior and 150 basis points (bps) lower than the state’s average of 7.9%, respectively.
Job gains between October and November reported an increase of 16,500 jobs. Transportation, warehousing and utilities were up 800 jobs for the month with construction jobs seeing the largest month-over decrease, down 3,100 jobs.
The Port of Long Beach processed 783,523 Twenty-Foot Equivalent Units (TEUs) in November, accounting for a 30.6% increase from November 2019. The surge in cargo shipments have been correlated to a combination of recent holiday shipments, consumer expenditures, and warehouses replenishing inventories and storing safety stock.
Ecommerce sales grew at a rapid rate of 40.3% from the prior year, as a result of local stay at home and social distancing restrictions. As the country awaits the widespread distribution of vaccinations, we can expect ecommerce sales to continue to grow in 2021. Furthermore, demand fundamentals should remain stable as more businesses look to convert to online sales.