Q2 2023 Industrial Market Outlook – Orange County


The Orange County’s industrial market is undergoing a shift as it moves away from the previously high
demand for warehouse space. This shift has resulted in an increasing amount of vacant excess space
entering the market for sublease. The market has experienced a surge in the rate of sublease space
being marketed, witnessing an 236% increase compared to the previous quarter and a significant 535%
increase compared to a year ago. As of midyear 2023, the total vacant sublease space amounts to 1.5
million square feet, which is 48.1% higher than the level observed during the Great Recession in Q2 2008.


Companies that expanded their warehouse/distribution space during the pandemic to meet the surge
in e-commerce have continued to reduce excess space. In Q2, the industrial market reached an alltime
high in the amount of available space for sublease, indicating that companies exceeded their
space requirements. This has resulted in an oversupply of space coming on the market. During the
second quarter, approximately 1.9 million square feet of additional vacant sublease space was listed,
representing the largest quarter-over-quarter increase on record. Additionally, 1.1 million square feet of
vacant space was added to the market directly, including 1 million square feet of completed construction.