Knowing the Market – March 2018 North OC Market Update

An update on the North Orange County Market as of March 2018 including vacancy, lease rates, sale prices, and more.

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As we enter the ninth year of economic recovery and expansion, the second longest in US history, OC’s competitive and diverse industrial market continues to thrive.

With demand outpacing supply across all size ranges, lease rates and sale prices have accelerated past previous highs, up 12% on average over the fourth quarter of 2016.

While this comes as welcome news to landlords, tenants are now challenged to compete for limited and expensive opportunities with very little help from owners in the way of concessions.

Vacancy

We are forecasting that vacancy will trend downward in 2018, providing even fewer alternatives for local tenants.

For tenants and buyers alike, being prepared, being able to react, and being willing to pursue “off market” deals will be keys for success in this competitive landscape. This tight market gives landlords the ability to push rents, extend lease terms and potentially upgrade the credit of their tenants.

Lease Rates

The average asking lease rate, which incorporates all size ranges and submarkets throughout Orange County, is $0.84 NNN per square foot per month, a one cent per square foot increase from last quarter and a $0.09 cent per square foot increase from a year ago (12% annual increase).

Tenants looking to renew leases signed in 2012-2013 are going to experience severe “sticker shock” based on the supply and demand imbalance.

Sale Prices

The Orange County industrial market’s average asking price at the end of the fourth quarter of 2017 came in at just under $264.28 per square foot (average price tracks 1,000 square foot buildings and larger).

While sale prices vary greatly depending on the size of the building and an average sale price doesn’t tell the entire story, this represents an increase of more than 12% from the fourth quarter of 2016. Even though transaction volume is down based on the lack of product, interest rates are still attractive, and demand remains “red hot” across all size ranges.

Users and investors will continue to compete in this “multiple offer” environment and will need to be both aggressive and creative to win out. As interest rates move up we expect to see more modest levels of appreciation in 2018.

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To discuss the current real estate market conditions, please contact:

MITCH ZEHNER	SETH DAVENPORT
Executive Vice President	Executive Vice President
mzehner@voitco.com	sdavenport@voitco.com
714.935.2307	714.935.2376
Lic. #00882464	Lic. #01413387

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Off Market Sales Sold by Voit

Here’s a few recent transactions completed by the Zehner Davenport Industrial Group:

4111 Palm Street, Fullerton – Sold for $184.00 PSF

• High Image 50,000 Square Foot Industrial Building
• 10,000 Square Feet of 2-Story Office Space
• 1 Grade Level Loading Door
• 8 Dock High Loading Doors
• 22’ Minimum Warehouse Clearance
• 2,000 Amps of Power
• Fire Sprinklered
• Large Yard Area
• Close Proximity to Orange 57 Freeway

955 Beacon Street, Brea – Sold for $175.00 PSF

• High Image 37,916 Square Foot Industrial Building
• 4,800 Square Feet of Office Space
• 2 Grade Level Loading Door
• 1 Dock High Loading Door
• 24’ Minimum Warehouse Clearance
• 600 Amps of Power
• Fire Sprinklered
• Yard Area
• Close Proximity to Orange 57 Freeway

895 Beacon Street, Brea – Sold for $150.55 PSF

• High Image 58,220 Square Foot Industrial Building
• 6,042 Square Feet of Office Space
• 2 Grade Level Loading Door
• 3 Dock High Loading Doors
• 24’ Minimum Warehouse Clearance
• 2.06:1 Parking Ratio
• Fire Sprinklered
• Close Proximity to Orange 57 Freeway

Knowing the Market

Any space is hard to find these days, the available supply of quality space is at an all-time low, and conditions are not expected to change in the coming year.

Working in the North Orange County Industrial Marketplace for over 30 years, we have built relationships with property owners, landlords and tenants, enabling us to provide them with solutions for their real estate needs.

These buildings were sold off-market, to clients whom had requirements and were looking for properties as either investments or for their business.

Give us a call we are here to help.