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Class A industrial availability to see big changes ahead in Orange County

I’ve written ad nauseam about the imbalance existing between supply and demand of available industrial buildings in Southern California.

Since the economy was reawakened – akin to Rip Van Winkle – in 2011 and after the mortgage meltdown, we’ve been on an upward trajectory. Recently, in the last six months of 2020 and the first four months of 2021, we’ve been on turbocharge!

If you desire to lease or buy a 100,000-plus-square-foot Class A building in Orange County, you have exactly one choice! That’s it. And, by the way, the building isn’t complete and won’t be until October. What about older stock? Unfortunately, the inventory isn’t more plentiful. Therefore, lease rates and sales prices have eclipsed sanity.

You may be wondering what differentiates older buildings – Class B and C – from newer Class A alternatives. These things: age, location and amenities.

During the last construction boom in the mid-2000s, very few industrial buildings in Orange County came equipped with warehouse ceiling heights in excess of 24 feet. Additionally, the fire suppression system rarely allowed high-pile storage without special permitting.

Consequently, logistics providers — those e-commerce folks who stack and ship things to your front door — were forced to consider areas where abundant new construction was occurring – the Inland Empire.

Well, that’s about to change! The development pipeline plans 10 new offerings with all the modern goodies of 30-foot ceilings and early suppression, fast-release sprinkler systems. Large truck access will be eased with 180-foot turning capabilities. Beautiful new offices will be housed at the entrance.

By the fourth quarter of 2022, approximately 3.2 million square feet of pristine new warehouses will be delivered to the Orange County market. To put that in perspective, that’s about 2.8% of the base of 116 million square feet. A whopping number!

Where, you may be wondering?

Fullerton has three projects totaling over 1.9 million square feet. Brea has three projects with 450,000 square feet. A new development in Orange will have 300,000 square feet. Two projects in Anaheim will total 350,000 square feet, and finally, Tustin is getting a new 225,000 square foot location.

Related: Logistics hub coming to former Kimberly-Clark campus in Fullerton

Underpinning the new construction was a ravenous rush by developers to consume land at the end of 2020 and that pace continues this year. But, it’s not vacant acreage. All of the new product is replacing obsolete manufacturing and flex campuses. A few of the notables include Kimberly Clark, Kraft Heinz, National Oilwell Varco, Schneider Foods and Universal Alloys.

Related: Amazon triples Southern California delivery hubs to get packages out faster

Yes, it’s very sad to see the manufacturing jobs stripped away.

Many of the major players are in the fray: IDI, Duke Realty, Goodman, Rexford and Western Realco. Capital is flowing in from internal sources and institutional means. This boom in construction also will keep contractors very busy. KPRS, Millie Severson, Oltmans and Fullmer lead the pack. Finally, our local architects have been drawing like crazy. Think: Hill Pinkert, Ware Malcomb and AO or Architects Orange.

Rents for the new product are projected to be well north of $1 per square foot. When I started in 1984, we were lucky to get 30 cents. My, how the landscape has changed!

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at or 714.564.7104. 

Source: Orange County Register

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