After nearly three years of contraction, Orange County’s industrial market showed signs of
stabilization in the fourth quarter. Tenant demand turned positive, ending eleven straight
quarters of negative net absorption. While the county still finished the year with overall negative
absorption, the fourth quarter marks an important shift in momentum.
Vacancy increased to 6.7 percent, up from historic lows but still below the national average.
Even with higher vacancy, Orange County remains one of the most desirable industrial markets
in the country, driven by its proximity to the Ports of Los Angeles and Long Beach and access to
a dense consumer base.
Average asking rents declined modestly, ending the quarter at $1.52 per square foot on a triple-
net basis, about 11 percent below the peak in late 2023. Rent pressure was most noticeable in
West County, while South County continued to command the highest average rents.
North County led the recovery this quarter, posting the strongest net absorption and finishing the
year as the only submarket with positive annual growth. The Airport area also saw solid fourth-
quarter demand, though it remained negative for the year overall.
Leasing activity was highlighted by several large transactions, while investment sales remained
selective but active, led by a major acquisition in the City of Orange. New construction
continued to deliver, particularly in South County, adding to near-term supply.
Looking ahead, economists expect slower job growth over the next two years. Inflation, interest
rates, and broader economic uncertainty remain top concerns, but improving tenant demand
suggests the market may be finding its footing.

If you would like a copy of the report, give me a call at 714-564-7109 or email me at
mark.larson@lee-associates.com