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Industrial is suffering from a supply shortage, but in the small-box segment of the market, there is a better supply-demand balance.

The industrial market in Southern California is suffering from a severe and well-documented supply shortage in the face increasing demand. In Orange County, however, the supply-demand balance in the small-box segment of the market is healthier, with a higher 3% vacancy rate and more opportunities for developers to bring new supply to the market. Still, this segment has also seen strong demand from users and increasing rents as a result.

“There continues to be high demand for industrial building between 50,000-100,000 square feet in Orange County, vacancy rates posting consistently in the 3% range and asking rental rates in the county increasing 8 percent over the past year,” Chris Migliori, EVP and principal at DAUM Commercial Real Estate Services, tells GlobeSt.com. “That said, much of the existing inventory consists of smaller buildings under 30,000 square feet, and developers who have been fortunate enough to secure land would prefer to develop and deliver single tenant buildings in the 200,000 square-foot-plus range.  The contributors for such development in that size range is lack of inventory, cost of construction and the spike in Industrial Land prices in the past 36 months.”

Migliori recently closed two industrial leases in this size range, a 53,850-square-foot building leased by U-Haul International and a 47,813-square-foot building leased by LG Hausys America. Both buildings are owned by Panattoni Development Co. “Recognizing the current Industrial Market conditions, Panattoni elected to develop four buildings ranging from 47,813 square feet to 69,882 square feet and selected DAUM as the exclusive listing agents,” says Migliori. “The land purchase was one of the last strawberry fields in North Orange County, the buildings were constructed on a 10 acre site split between Anaheim and Placentia.”

Panattoni also focused on quality in developing these properties to target top tier tenants. The properties are class-A, corporate headquarters with 30-foot warehouse clear height, ESFR, docks, fenced yards and state of the art design. “The marketing campaign attracted four nationally recognized credit tenants in the core North Orange Industrial Market,” says Migliori. As a result, the leases were signed and completed before delivery of the properties.

This year, Migliori expects industrial market activity to continue to be strong in Orange County, particularly in this market segment. “The overall Industrial Market in Orange County continues to show more horse power,” he says. “Even with 1 million square feet of industrial deliveries expected in 2020, we expect absorption will remain high and rents will continue to rise.”

Executive Vice Presidents Chris Migli and Paul Gingrich acted on behalf of the owners of a roughly 230,000-square-foot commerce center.

Panattoni Development Co. and Principal Real Estate Investors have inked two leases totaling 101,663 square feet with U-Haul International Inc. and LG Hausys America Inc., with each company occupying a free-standing building. The new tenants will join Rakuten Super Logistics and Beacon Roofing Supply at the partnership’s 232,000-square-foot Orange County Commerce Center in California, at the border between Anaheim and Placentia.

Executive Vice Presidents Chris Migli and Paul Gingrich from DAUM Commercial Real Estate Services represented the owners in the deal. The brokerage company was appointed as the leasing agent of the property when the project broke ground in 2018.

U-Haul signed a five-year lease at the 53,850-square-foot building situated at 1367 S. Van Buren St. in Anaheim. The construction comprises more than 8,150 square feet of office space, 2.4 acres of land, six dock-high loading doors, a grade-level loading door and 87 parking stalls.

The 47,813-square-foot building located at 711 S. Van Buren St. in Placentia will house LG Hausys for the next seven years. The construction provides 6,995 square feet of office space, 2.1 acres of land, five dock-high loading doors, a grade-level loading door, as well as 69 parking stalls.

Yardi Matrix data shows that Orange County Commerce Center encompasses two additional buildings: a 69,882-square-foot one at 711 S. Van Buren St. occupied by a roofing distributor and a 60,809-square-foot facility at 1367 S. Van Buren St. Each structure features 30-foot minimum warehouse clearance height, an 800-amp main switchgear with 2,000-amp UGPS, an ESFR sprinkler system, a fully secured and gated truck courtyard, 100 percent concrete truck court and auto parking areas, as well as 3 percent skylights.

According to Gingrich, Orange County is one of the tightest industrial markets in the U.S. because of its proximity to metros such as Los Angeles and the Inland Empire as well as major ports.

CED Greentech, a renewable energy product distributor, has leased 67,000 square feet of space near Sky Harbor Airport as it proceeds to move its headquarters from Tempe to Phoenix.

CED Greentech, a distributor of residential, commercial and utility-scale solar and a division of Consolidated Energy Distributors, signed a 7-year lease for the space in the Hohokam 10 Business Center near 48th Street and University Drive. The lease is worth $4.1 million, and the landlord is Exeter Property Group. The company is currently based at 2405 W. Geneva Drive in Tempe.

Rich and Sebastian Sica of Daum Commercial Real Estate Services brokered the lease.

“This was a rare opportunity for our Client to acquire one of the last available suites in Exeter’s state-of-the-art Hohokam 10 Business Center development,” Sebastian Sica said in a statement. “This lease and expansion will provide Greentech with ample space to seamlessly continue its ongoing sales and distribution operations, while additionally featuring a greenhouse lights showroom highlighting the firm’s eco-friendly capabilities and products.”

Earlier this year, CED Greentech leased another Phoenix warehouse, near 16th Street and University Drive, about five miles from the new space.

“We’ve maintained a close relationship with the lessee for nearly two decades, cultivating a deep understanding of how Greentech and its parent company operate in the market,” Rich Sica said in a statement. “This new location is part of CED’s formation of a central, freeway-adjacent hub in Phoenix.”