Orange County Industrial Market Report

Inventory growth strains demand, but vacancy remains lowest on the West Coast. Orange County’s industrial stock has grown at annual rates between 0.5 percent and 1.0 percent since 2022, highlighted by the delivery of distribution centers and warehouses in infill areas across the metro’s dense suburbs. In 2025, completions expand local inventory by a similar percentage, despite a recent cooling in tenant demand. Amid tighter economic conditions, many firms have paused expansions and turned to subleasing, which increased local vacancy by 300 basis points over the past five quarters. As such, the metric stood at 6.2 percent this March, still the lowest among major California markets. Local vacancy is being skewed by exaggerated availability among properties with more than 50,000 square feet, with this segment’s rate sitting at 8.4 percent in June. In contrast, small-bay facilities approached the second half with a relatively scant 4.1 percent vacancy rate. Looking ahead, small-bay space should remain tight due to limited construction, while newer midsize and large properties may benefit as supply pressures ease next year. These dynamics, along with constrained land and strong demographics, support a positive long-term outlook.