USER DEMAND for industrial space has never been higher throughout Orange County. Tenants and buyers that halted negotiations during the pandemic, in hopes the market may soften, have been forced to act quickly.
AVERAGE ASKING RENTS reported an all-time high in 2Q21, concluding at $1.07/ SF on a triple net basis. The recent spike can be attributed to tenants who waited to make real estate decisions have now found themselves in a highly competitive market with many spaces receiving multiple offers.
DIRECT NET ABSORPTION was positive in 2Q21 with over 750K SF, the highest it has been since the pandemic started in early 2020. Increases in tenant movement has further compressed vacancies back to historical lows, falling to 2.2%.
AFTER coming off strong leasing activity in 1Q21 and 4Q20, leasing activity in the second quarter fell to 2.9M SF. Leasing activity may face challenges in the coming months as the search for industrial space may prove difficult with limited availabilities across the metro.
AS OF MAY 2021, the unemployment rate was at 5.9%, 30 bps lower from the month prior and lower than the state’s average of 7.5%. Job gains between April and May reported an increase of 19,100 jobs.
THE PORT OF LONG BEACH, for the first time in its 110-year history processed over 900K TEU’s in May. During the first 5 months in 2021, the Port has managed to move over 4M TEU’s, an increase of 42.3% from the same period last year.
HEALTHY FUNDAMENTALS will continue to keep the Orange County industrial market on firm footing. Market demand continues to outpace supply and with a limited amount of construction (421,853 SF) to help supplement low availabilities, tenants must act quickly as demand for quality industrial space will remain competitive moving forward.