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Orange County Industrial Market Report

1st Quarter 2022

Posted In — Market Research | Market Report

MARKET DRIVERS

USER DEMAND has never been higher for the Orange County industrial market as the competition for space remains competitive, pushing rental rates to new all-time highs. Direct asking lease rates continue to spike across the market, concluding the quarter at $1.28/SF.

POSITIVE GAINS in absorption continued with over 471K SF absorbed in 1Q 2022, making it the 11th straight quarter of positive absorption. Increases in tenant movement further compressed direct vacancies, decreasing to 1.2%.

DEVELOPERS continue their search for new projects in the market with over 1.8M SF under construction. The highly anticipated Goodman Logistics Center is on track to be delivered in the third quarter, supplementing the rise of infill demand with four state-of-the-art logistic facilities at a total of 1.5M SF. Over 283K SF was delivered in 1Q 2022.

ECONOMIC OVERVIEW

AS OF JANUARY 2022, the unemployment rate was at 4.2%, 50 bps higher from the month prior and lower than the state’s average of 5.4%. Job losses between December and January totaled 29,100 jobs.

THE PORT OF LONG BEACH processed 796,560 TEU’s in the month of February, up 3.2% from the year prior.

NEAR-TERM OUTLOOK

OCCUPIERS throughout the Orange County metro will need to act quickly as availabilities continue to fade, further pushing rents past all-time highs with rent growth forecasted to be between 10%-15%. Additionally, Los Angeles and Inland Empire are also experiencing inventory constraints and we can expect renewal activity to increase moving forward as relocation options remain limited.

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