Orange County Warehouse Vacancy & Leasing Trends – Q1 2025

Market Overview

The Orange County industrial real estate market faced mounting headwinds in Q1 2025. Rising vacancy rates and modest declines in asking rents counterbalanced strong leasing activity. Vacancy climbed to 3.9%, up 80 basis points from the previous quarter. Net absorption turned negative for the fifth straight quarter, with a loss of 497,000 square feet, underscoring a growing disconnect between available space and actual occupier demand.

Despite the increase in vacancy, total gross leasing activity reached 2.4 million square feet—a 14% rise quarter-over-quarter and a 79% jump year-over-year. This growth was driven largely by big-box transactions and activity in aerospace, manufacturing, and retail sectors.

Asking Lease Rates

Average asking lease rates continued to decline, dipping $0.02 quarter-over-quarter to $1.66 NNN per square foot. Rates have now declined for three consecutive quarters, totaling a $0.15 drop since their Q4 2023 peak. Incentives such as rent abatements and tenant improvement packages remain widespread as landlords compete for tenants in a softening market. The Airport Area reported the highest lease rates at $1.81 NNN/SF, while North Orange County averaged $1.55.

Vacancy and Availability

While vacancy increased sharply, availability rose only slightly—up just 10 bps to 6.1%. This discrepancy signals an increase in lingering listings that are not yet officially vacant. Available space continues to sit longer on the market, with the most notable rise in vacancy seen in South Orange County, driven by the delivery of over 500,000 square feet of newly vacant space.

Net Absorption and Leasing Activity

Though total leasing activity rose, net absorption stayed negative, reflecting continued churn in the market. Only North Orange County posted positive absorption (213,000 SF), while West, South, and the Greater Airport Area all saw declines. The largest new deal was a 202,813 SF lease signed by a manufacturing occupier in Santa Ana. Five deals exceeding 100,000 SF closed in Q1 2025, highlighting demand for large logistics and distribution centers.

Development Pipeline

Construction surged in Q1, with 2.5 million square feet of industrial space under construction across Orange County, up from 1.8 million SF in Q4 2024. Deliveries totaled 326,000 SF, largely concentrated in North OC. New development includes two major projects in the City of Orange totaling nearly 300,000 SF, and 213,000 SF in Irvine Spectrum.

Economic Conditions

Unemployment in Orange County rose to 4.1% in January 2025, up from 3.9% a year ago. Between December and January, over 30,000 jobs were lost across the region. Policy-driven trade uncertainty continues to cloud business sentiment, with GDP forecasts revised downward to just below 2%.

Key Transactions

• Straub Distribution (Renewal) – 281,584 SF, Anaheim
• Confidential Manufacturer – 202,813 SF, Santa Ana
• LeGrand – 194,357 SF, Anaheim
• Bear Down Brands – 147,950 SF, Fullerton
• Doosan (Bobcat) – 139,449 SF, Fullerton

Submarket Highlights

• North Orange County: 111.7M SF inventory, 5.9% availability, $1.55 NNN/SF
• Greater Airport Area: $1.82 NNN/SF average, highest lease rate in region
• South Orange County: Largest negative net absorption (-513,000 SF)

Looking for warehouse space in Orange County? Visit OrangeCountyWarehouses.com to explore lease opportunities, track availability by submarket, and stay informed on shifting market conditions.

Need help navigating lease negotiations or finding space in North OC, South OC, or the Airport Area? Our industrial experts are here to guide you.