MODEST TENANT GROWTH ENDS RECORD SLIDE; RENTS OFF 11%
Positive tenant demand returned in the fourth quarter, ending the county’s largest and longest contraction on record at 11 straight quarters of negative net absorption totaling 9.3 million SF, or 3.4% of the total inventory. Despite the Q4 improvement, net absorption for the year was 1.8 million SF in the red.
The nearly three-year slide pushed up the average vacancy rate from a lowest-in-the-nation 1.8% to 6.7%, which still is less than the 7.6% national average. Orange County remains among the nation’s most desirable industrial markets, featuring access to the twin ports of Los Angeles and Long Beach and population-dense Southern California, for example, with 12 million people residing within 50 miles of Anaheim.
Countywide, the average triple-net rental rate settled at $1.52 per SF, which was down 3.8% from a year ago and off 11% from the $1.71-per-SF average at the close of 2023. Rents were lowest in West County, averaging $1.42 per SF, and highest in South County at $1.73 per SF.
There was strong fourth-quarter demand in the county’s two largest submarkets, North County and the Airport, where average vacancy rates ended the year at 6.1% and 6.4%, respectively. The North County submarket, the county’s largest with 116.9 million SF of inventory, posted the greatest gain in Q4 with 554,631 SF of net absorption.
North County was also the only submarket to end the year in the black overall with 320,391 SF of positive annual growth. Nevertheless, North County rents averaged $1.47, down $13% from the peak in 2023 of $1.69 per SF.
The 73-million-SF Airport submarket posted 294,641 SF of tenant demand in the fourth quarter but for the year net absorption was negative 443,229 SF. Negative net absorption totaled 380,764 SF in West County in Q4 as demand fell more than 1 million SF in 2025, the largest annual decline since 2012. Rents were off an average of 17% from their $1.71 peak in late 2023. With an average vacancy rate of 7.3%, South County reported 178,108 SF of negative net absorption in Q4. The 43-million-SF submarket increased in 2025 with the delivery of seven buildings totaling 740,489 SF.
The largest lease of the fourth quarter was a sublease for a 190,800-SF building at 6300-6340 Valley View St., Buena Park, by Mohawk Industries with Prudential/PGIM Inc. listed as landlord. Dialed Holdings leased 72,303 SF at 15551-15561 Del Amo Ave., Tustin, from Link Logistics Real Estate.
The largest sale of the quarter was $69.6 million for a leased-up 249,431-SF
building at 2164 N. Batavia St., Orange, purchased by Lincoln Property Co. and Artemis Partners from Frick Family Properties.
MARKET FORECAST
Orange County will see slow job growth over the next two years, said Cal State Fullerton economists Anil Puri and Mira Farka in their annual economic forecast. In CSUF’s latest survey of top local executives, 46% said they expect to increase sales in the first quarter. Their biggest concern was inflation, followed by interest rates, tariffs, geo-political risks and housing supply.
ABOUT LEE & ASSOCIATES
Celebrating more than 46 years of leadership excellence in commercial real estate, Lee & Associates is the largest broker-owned firm in North America with locations across the U.S. and Canada.
>With a broad array of regional, national and international clients – ranging from individual investors and small businesses to large corporations and institutions – Lee & Associates has successfully completed transactions with a total value of more than $32 billion in 2022.