The Orange County and Mid-Counties industrial market continue to outperform expectations given the current state of the state’s economy.
Partial shutdown orders are still in place for many business sectors, especially the restaurant, personal services and entertainment industries.
Those who supply those sectors have also been hit hard, but the explosive growth in e-commerce is the tide lifting all boats, and it has kept sales prices and lease rates at pre-pandemic levels, and vacancy near it’s historic low point. Lease and sale activity has been impacted, but the third quarter saw a rebound in new space requirements, which should help the markets perform well again in Q4.
The biggest unknown at this point is the election, both at the national and state level. The outcome of Proposition 15, California’s so-called Split-Roll Initiative looks like it may have enough voter support to pass.
If that happens, almost all commercial properties will be subject to reassessment every three years to full market value, ending the 42-year-old protections offered by the iconic Proposition 13. The impact on operating expenses for tenants and valuations for property owners could be substantial. It is a game-changer and anyone owning or using commercial real estate in California should beware.