Industrial vacancies go up in Newport-Mesa

Paul Clinton

Industrial properties in the area are losing tenants faster than

they can replace them, mirroring a deteriorating leasing market

throughout the Southland, experts said.

The amount of unleased space is rising, rents are dropping, and

there’s no improvement in sight, said Mike Hefner, a senior vice

president at Voit Commercial.

“Vacancies are rising,” Hefner said. “[The situation is] not

getting better.”

Costa Mesa lost 131,176 square feet of industrial space in 2002,

reducing the city’s inventory to 10.9 million square feet. Of that

space, about 7.16% is now vacant, Hefner said.

For the first time in a decade, the city -- and the broader Orange

County market -- experienced a phenomenon known as a “negative

absorption rate,” in which the area lost more square footage than was

added.

In Newport Beach, an area that doesn’t have much industrial square

footage, landlords added 35,442 square feet to the city’s landscape

in 2002. The city now counts about 2.3 million square feet of space

in industrial inventory. About 3.25% of that was vacant at the end of

2002.

The fourth quarter of 2002 was particularly tough on Newport-Mesa,

Hefner said.

Costa Mesa saw a negative 19,020-square-foot quarter, and Newport

Beach lost 14,973 square feet, Hefner said.

Newport-Mesa has some type of vacancy in 201 industrial buildings.

In Costa Mesa, there are 6.36 million square feet of leasable space.

Of that, 332,950 square feet are vacant, leaving the area with a

5.23% overall vacancy as of Wednesday.

In Newport Beach, 20 buildings have a vacancy. During the first

part of 2003, tenants filled 14,973 square feet of space, bringing

the city back to zero-vacancy status.

While the lease market is struggling, Hefner said prices for

custom-built industrial facilities are going higher. These buildings,

made to order for companies, have strengthened Orange County’s

commercial real estate market, the real estate broker said.