Owners of commercial real estate in Orange County quickly recognize the need to know what drives property values. And with things changing as fast as they are, that knowledge has become more important than ever.
Perhaps the most significant factor driving property value in Orange County is the rising demand for industrial space, which has been ongoing since 2010.
Tight supply has helped some areas recover nearly all the losses in value that resulted from the Great Recession. Sale prices have spiked more than lease rates, mainly due to the availability of 90% financing for owner/users at low fixed rates offered through the Small Business Administration.
The resulting imbalance in the supply/demand equation has reached a critical level.
This has resulted in a bifurcated value structure: one price for owner/user properties and another for leased investment properties of equal quality.
Vacancy has fallen sharply and lease rates are moving back up, emboldening landlords to offer fewer concessions like free rent and specialized tenant improvements.
The industrial vacancy rate has fallen below 4% and acute shortages in some submarkets have become problematic for businesses looking to grow.
The days of moving allowances and cash signing bonuses are gone.
Every property owner acquires assets based on market conditions and trends as they exist at the time acquisition, but also with an investment strategy that reflects the relative importance of cash flow, value appreciation, maintenance cost and other investment priorities.
However, markets are dynamic and so are the goals and objectives of the investor.
So, it is a good idea to regularly measure the performance of every property relative to changes in investment goals, functional utility, operational costs and the overall quality of the property as compared to others in the area.
The Zehner Davenport Industrial Group specializes in assisting investors with the analysis, acquisition and disposition of commercial real estate in Orange County. We understand how important it is to be completely informed at all times, and we are armed with the resources, knowledge and experience to help you make informed decisions regarding your real estate.
Whether or not you have any plans to dispose of existing assets or acquire additional properties, we can help.