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California  + Orange County  + Industrial  | 

New Report: OC’s Industrial CRE Market Surging (Again)

As the first quarter of 2022 comes to a close, and the headlines regarding industrial real estate deals in Southern California continue to pile up, Kidder Mathews has rounded up data for Orange County – and the numbers don’t lie. (Full reports for O.C. and Inland Empire)

Some highlights from Kidder Mathews’ market update include:

Market Highlights

  • Direct-vacancy levels increased to 11.6% in 1Q 2022, an increase of 5.2% year-over-year 
  • Available sublease space totaled 3,438,710 SF in the first quarter 
  • Average asking rates remained stagnant at $2.73/SF on a full-service basis 
  • Average sale prices in 1Q 2022 were $274.17/SF with cap rates at 5.4%

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.  
  • 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 280K SF was delivered in 1Q 2022.
     

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. Anticipate demand for industrial space to remain extremely competitive in 2022 given the current supply constraints.   

Source: CoStar, Port of Long Beach, OCBJ

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