Orange County Q1 2020 Industrial Market Outlook
Market Overview
Orange County’s industrial market exhibited strong demand in Q1 2020 prior to COVID-19. The asking rent was the highest on record, up 2% from the prior quarter and 6.3% year over year to $1.01/SF. The market also experienced a steady vacancy rate when compared to last year, up just 20 bps from Q4 2019, ending the quarter at 3.1% – one of the lowest rates seen in the industrial market since Q1 2013. Vacancy in Orange County has remained below 5% for 27 consecutive quarters.
Leasing and sales volume (4.1M SF), due to limited space availability, was 12% lower than this time last year. Orange County’s industrial market has been supply-constrained for much of the last decade due to the lack of land for construction. The quarter ended with two projects underway totaling 506,108 SF. Nearly all the new product under construction (497,638 SF) is at Shea Business Center in Santa Ana, which is scheduled for completion in Q2 2020. With the uncertainty brought on by COVID-19, construction will likely pause until the path forward becomes clearer.
Market Outlook
Trends to Watch
- Tenants evaluating their businesses; defaulting or restructuring leases
- Landlords offering concessions; providing rent abatement or deferment
- Rents and sales prices dropping until certainty is restored
Orange County Industrial
Average Asking Rent & Vacancy Rate Graph
