Industrial property still hot in O.C.

April 30th, 2008, 12:05 am · 29 Comments · posted by Mary Ann Milbourn

Grubb & Ellis says the place to be in O.C. real estate during the first quarter was in warehouses and other industrial space.

Industrial vacancies here remained tight at 4.3% during the first quarter, just slightly above the 4% in the fourth quarter of 2007. That compares to the office market, which saw the vacancy rate jump to 14.9%.

“The overall climate throughout the market place is one of cautious optimism, where solid product still demands a high price and where ‘all cash’ buyers still want to own property in this highly desirable market,” says Grubb in its latest report on industrial market trends in O.C. (CLICK HERE to see the report.)

The airport area accounted for the majority of the sales and leasing activity in industrial space while North County had the lowest vacancy rate, at 3.3%.

Grubb says the economic slowdown could even work to the benefit of the industrial market:

“If the economy remains slow as expected over the next few quarters, it could temporarily boost demand for warehouse space because importers and manufacturers will need to store their excess inventory until sales catch up. We forecast that vacancy will remain at a healthy level (below 5 percent) throughout the next 2 quarters with expectations of continued demand throughout 2008 remaining stable.”

Other recent items on O.C.’s commercial real estate:

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Bruce says:

April 30, 2008 at 2 am

From Grubb Ellis Report:
“While Orange County added 6,500 jobs from January to February of
2008, the county has lost 21,800 jobs over the past year. The
unemployment rate in Orange County was 4.3 percent in February
2008, down from a revised 4.5 percent in January of 2008, but above
the year-ago estimate of 3.6 percent. ”
The prediction that the OC will lose 15,000 jobs in 2008 is off to a bad start. Of course the 4.3 percent unemployment rate is another indication that there is a full blown recession is going on. Don’t forget the 5% increase in income that is another good indicator of recession. What’s the expression? LOL?

Thoughtful says:

April 30, 2008 at 7 am

Great points, Bruce. Today’s GDP numbers also show no recession.

no_vaseline says:

Part of this is induced by the expansion of the Platinum Triangle. Everything inside it was commercial space, which has been replaced by condos or huge dirt holes in the ground that won’t be developed for a generation.

In the Platinum Triangle/west Orange area, you can drive around on main streets and there is the highest level of “For Lease” signs I can remember seeing since 2001.

It’s not housing, but it’s not solid gold either. Maybe gold plated.

SeekingAlfalfa says:

April 30, 2008 at 8 am

Folks, we’ll need to take it easy on National Bubbie, Rants Hwood,etal today. I’m sure this is a sad day for them. Albert Hoffman has passed away.

awgee says:

April 30, 2008 at 9 am

Wasn’t there an article in here this morning which was saying how the rich were planning on buying real estate this year?

Awgee,
yeah I know, these guys won’t see an elephant in the room unless it’s a color they like.

April 30, 2008 at 10 am

I wonder where Socal78 is? Probably wrapping up his sale after a day and a half on the market.

Eat it in the OC says:

Yea…everybody is doing that aren’t they truthi.. I was camping out last night just to get on a lottery to buy a new home in Temecula.

beckoreilly says:

Are you saying they are all on LSD alfalfa?

Way to go Beck. I think whizzed right past them.

National Bubbie, you’re not touting a book by a guy whose Dad went to prison for tax evasion are you?

April 30, 2008 at 11 am

The Dow is thisclose to breaking 13,000. Only 1,000 points or so to the all time high.

The Fed just dropped another .25 and the Dow did pop over 13,000 for a second. If it does close above 13,000 and Oil closed below 114, could indicate a shift in psychology. And no recession

Price of Bad Tidings says:

Thoughtful Says:
April 30th, 2008 at 11:23 am
“The Dow is thisclose to breaking 13,000. Only 1,000 points or so to the all time high.”

Now how to close is that number to keeping up with inflation based on the previous all time high? How much of that is based on the hope of yet another Fed cut, which would ensure further consumer inflation?

“SeekingAlfalfa Says:
April 30th, 2008 at 11:29 am
The Fed just dropped another .25 and the Dow did pop over 13,000 for a second. If it does close above 13,000 and Oil closed below 114, could indicate a shift in psychology. And no recession”

Huh? The shift in investor psychology isn’t going to alter consumer psychology, which this economy is largely based on. And consumer sentiment keeps falling.

PBT,
So what are you Mr. Smart Guy, a mind reader? Some day you will have to face the terrifying fact that your plan for world domination just won’t work. People will start buying when they feel like not when you tell them they can.

April 30, 2008 at 12 pm

Actually, they’ll start buying when the banks tell them they can.

April 30, 2008 at 1 pm

SeekingAlfalfa Says:
April 30th, 2008 at 11:55 am

“PBT,
So what are you Mr. Smart Guy, a mind reader? Some day you will have to face the terrifying fact that your plan for world domination just won’t work.”

No, just an astute observer who doesn’t take optimistic statements that inaccurately depict the real world at face value. If I were to take over the world, I would also run positive propaganda to keep the masses under control.

“People will start buying when they feel like not when you tell them they can.”

As opposed to bulls always saying that now is a good time to buy?

RadT says:

Bruce says: “The prediction that the OC will lose 15,000 jobs in 2008 is off to a bad start. Of course the 4.3 percent unemployment rate is another indication that there is a full blown recession is going on.”

No need to be sarcastic. Last year, OC added 7800 jobs between January and February and still ended up losing 21,000 jobs during the year. In fact, the gain you quoted is the smallest between January and February since 2000 (my data does not go farther back). BTW, the March unemployment is up to 4.6%.

April 30, 2008 at 2 pm

RadT Says:

“No need to be sarcastic. Last year, OC added 7800 jobs between January and February and still ended up losing 21,000 jobs during the year. In fact, the gain you quoted is the smallest between January and February since 2000 (my data does not go farther back). BTW, the March unemployment is up to 4.6%.”

Job growth is a better barometer of the employment picture anyway. The post-2001 recession recovery, fueled by the RE bubble, produced some of the weakest national job and wage growth — far lower than during the 90’s recovery. And yet, the national unemployment rate was higher in the 90’s.

smoothoperator says:

April 30, 2008 at 5 pm

With job losses at 21000 how could the unemployment rate be that low still? Is it because most of the people that were laid off resided in the inland empire?

Excellent theory, smooth! I think it has a lot of merit.

.043@1.7million jobs is ~73100 unemployed in the county….. If you add the 20k more jobs on top of that you get close to a 5.4% unemployment rate. It just does not make sense for unemployment to jump 1.1% in a matter of weeks. This lends credence to the fact that most of the people who were laid off did not live in Orange County but rather lived in the Inland Empire or Los Angeles. There is no way that the unemployment rate in the county could be that low. With the low educational standards of I.E residents its obvious that most of the jobs that were cut were extraneous periphery jobs related to the housing/subprime markets. The number of jobs lost in the county has a much more profound effect on the Inland Empire than it does within Orange County.

April 30, 2008 at 8 pm

“smoothoperator Says:
April 30th, 2008 at 5:10 pm
With job losses at 21000 how could the unemployment rate be that low still? Is it because most of the people that were laid off resided in the inland empire?”

Or perhaps the unemployment rate does not count discouraged or underemployed workers.

rants says:

May 1, 2008 at 12 am

figures the geniuses that bought property in orange
county at the top of the bubble- and you know
who you are truthi- would believe the governments
cpi and gdp numbers all of which are blatant
fabrications of the truth- this of course helps explain
why the government can get away with misleading
the general public thanks oh real men/ women of genius
you help keep the big lie alive and well clueless bimbos

Lansner on Real Estate » Blog Archive » Tell us ‘Is $27 million sale sign of housing bottom?’ - OCRegister.com says:

May 15, 2008 at 9 am

[...] Evidence of a market at its bottom? Newport Beach bayfront mansion listed for $38.5 millionHistoric home becomes O.C.’s 4th priciest saleO.C. price record set for off-water home: $27.125 millionReal estate skeptic helps stop Michael Jackson ranch foreclosureLate April’s homebuying dip smallest since JulyDemand for O.C. homes nears ‘06 levelsIndustrial property still hot in O.C. [...]

Slice	Price	Ch.	Sold	Ch.
House	$495,000	+4%	1,841	+3%
Condo	$304,000	+3%	845	+8%
New	$500,000	+4%	150	-26%
All OC	$430,000	+2%	2,836	+2%

Orange County Register