By Carrie Rossenfeld | Orange County
IRVINE, CA—Available industrial space in Orange County continues to be scarce, a fact that is helping to drive up sales prices in the sector, according to Voit Real Estate Services. Following the trend of lease rates rising, sales prices are also gradually ticking up.
As GlobeSt.com reported earlier this week, both industrial vacancy and availability continued trending downward in Q1, and Jerry Holdner, Voit’s VP of market research, says the vacancy rate hasn’t been this low since the fourth quarter of 2008. The availability of direct/sublease space being marketed was also down, decreasing nearly 17% from 2013’s rate of 7.1%. The average asking triple-net industrial lease rate rose one cent from the previous quarter to $.62 per square foot per month, four cents higher than in Q1 2013, and Holdner is forecasting that this rate will rise to $.65 per square foot per month by the end of this year.
Holdner attributes the trend of rising sale prices to the diminishing supply of industrial product for sale in the County, particularly in buildings smaller than 100,000 square feet. “Currently, only around 2% of the inventory in the Orange County industrial market is available for sale. This lack of supply will continue to place upward pressure on pricing going forward.”
The average asking sale price in the first quarter of 2014 was $147.55 per square foot, a 5.51% increase from the previous year’s price of $139.85. “Overall, we continue to be optimistic about the Orange County market,” says Holdner. “We continue to see improvement in both the office and industrial markets, and we anticipate positive gains moving forward, provided job creation continues and consumer confidence stabilizes.”
Kevin Thomas is a Senior Vice President / Principal of Lee & Associates-Newport Beach, Inc. Kevin specializes in Industrial and Office brokerage in the Airport area of Orange County, California.