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ECONOMIC UNCERTAINTY SLOWS ORANGE COUNTY INDUSTRIAL MARKET IN 1992; ACTIVITY TO PICK UP IN 1993, FORECAST REVEALS

 NEWPORT BEACH, Calif., Jan. 14 /PRNewswire/ -- Recessionary conditions slowed demand for both standard industrial and research and development space in Orange County in 1992, however, activity is projected to pick up in 1993, according to a report released today by Grubb & Ellis Commercial Real Estate Services.
 "We had positives and negatives in 1992," said Brad Schroth, vice president with Grubb & Ellis' Newport Beach office. "We saw some national tenants closing local facilities and consolidating their operations to facilities outside of the county or state. However, we also saw local companies taking advantage of current conditions and choosing to expand, as well as some firms moving into the county from Los Angeles."
 According to the county-wide study, sales and leasing activity for research and development space totaled 2.4 million square feet for 1992, down from the 3.7 million square feet posted a year ago.
 Grubb & Ellis forecasts that R&D sales and leasing activity will increase moderately in 1993, resulting in a year-end total of 2.5 million square feet.
 With no new construction, the vacancy rate for R&D space county- wide dropped to 16.3 percent in 1992 from 18.2 percent a year ago.
 However, Grubb & Ellis projects that the R&D vacancy rate will increase to 16.7 percent by the end of 1993 as an increasing number of owner-user buildings are vacated and put on the market for sale or lease.
 In looking at the various submarkets, the Airport Area led the county in total sales and leasing activity for 1992, with 855,587 square feet and ended the year with a vacancy rate of 15.7 percent. In 1991, the vacancy rate stood at 20 percent in this submarket and activity totaled 1.5 million square feet.
 South County posted 446,103 square feet of sales and leasing activity in 1992 and a vacancy rate of 21.4 percent. In 1991, the vacancy rate was 24.1 percent, while activity totaled 1 million square feet.
 Combined South County and the Airport Area account for 60 percent of the research and development space in Orange County.
 North, Central and West County, while not major markets for research and development space, posted healthy sales and leasing activity in 1992 with 411,478 square feet; 220,868 square feet; and 447,192 square feet, respectively. Vacancies at year-end were North County, 20.2 percent; Central County, 15.6 percent; and West County, a very low 7.9 percent.
 The total amount of new research and development space under construction remained at zero at the end of 1992.
 "There are few options available for corporate headquarters type users seeking buildings larger than 100,000 square feet, especially in South County," said Jim Cunningham, senior marketing consultant with Grubb & Ellis' South Orange County office. "In the past, these types of tenants have gone the build-to-suit route, but developers are unwilling to finance those projects today."
 In the standard industrial category, 8.8 million square feet of manufacturing/distribution space was sold or leased in 1992, a decrease from 1991's year-end total of 10.0 million square feet.
 Grubb & Ellis projects an increase in activity in 1993 with 10 million square feet of standard industrial space leased or sold by year-end.
 "With the uncertainty about the economy, many users adopted a wait and see attitude in 1992," said David Knowlton, industrial properties specialist with Grubb & Ellis' Anaheim office. "However, since the election, more users are making the decision to make a move."
 With no new construction, the vacancy rate for standard industrial space county-wide dropped to 17.1 percent in 1992 from 20.2 percent a year ago, despite the decrease in sales and leasing activity.
 However, Grubb & Ellis forecasts that despite an increase in activity in 1993, the vacancy rate will be unchanged at year-end as more owner-user buildings come on the market for sale or lease.
 Leading the county in sales and leasing activity of standard industrial space in 1992 was the Airport Area with 2.8 million square feet down from 3.3 million square feet a year ago, followed closely by North County with 2.7 million square feet down from 2.9 million square feet in 1991. Vacancies in those two markets were 18.3 percent and 14.5 percent, respectively, vs. 25.3 percent and 18.8 percent a year ago.
 Central County and West County both recorded in excess of 1 million square feet of activity in 1992. Central County ended the year with a vacancy rate of 15.2 percent and 1.1 million square feet of sales and leasing activity, while West County posted a vacancy rate of 18.6 percent at year-end and 1.4 million square feet of activity.
 South County, the county's smallest standard industrial market with just 6 percent of the total base, recorded 701,685 square feet of activity and a vacancy rate of 26.4 percent for 1992.
 Construction of new speculative industrial space remained virtually at zero at the end of 1992 with just 64,477 square feet under construction in West County.
 "With financing virtually non-existent and a large supply of existing product currently available, construction of new product doesn't make economic sense right now," said Knowlton.
 -0- 1/14/93
 /CONTACT: Sharon Abar, public relations director of Grubb & Ellis, 714-937-0881/


CO: Grubb & Ellis Commercial Real Estate Services ST: California IN: FIN SU:

BP-JL -- LA018 -- 4872 01/14/93 12:24 EST
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Date:Jan 14, 1993
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