{"id":6827,"date":"2026-05-16T12:01:35","date_gmt":"2026-05-16T12:01:35","guid":{"rendered":"https:\/\/siliconvalleymovingpost.com\/?p=6827"},"modified":"2026-05-16T12:01:35","modified_gmt":"2026-05-16T12:01:35","slug":"will-the-industrial-real-estate-market-recover-in-orange-county","status":"publish","type":"post","link":"https:\/\/siliconvalleymovingpost.com\/?p=6827","title":{"rendered":"Will the industrial real estate market recover in Orange County?"},"content":{"rendered":"
\n

The industrial market in Orange County hit pause in mid-2022. Just like that.<\/p>\n

A once-robust market filled with constant activity suddenly fell silent. Buildings that would have generated multiple tours and competing offers within days began sitting for weeks, then months.<\/p>\n

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Yes, we\u2019re beginning to see signs of life again.<\/p>\n

Several notable manufacturing companies are actively touring and leasing space. Phones are ringing a bit more frequently. Brokers are cautiously optimistic. But overall, the velocity remains tepid compared to the frenzied pace we experienced only a few years ago.<\/p>\n

For owners of industrial real estate, that slowdown carries a significant cost.<\/p>\n

Most owners understand the obvious expenses associated with vacancy. If you own your building free and clear, your carrying costs may be limited to property taxes, insurance, utilities, landscaping, security and maintenance. If there is debt on the property, the monthly burden rises quickly as mortgage payments continue regardless of whether the building is occupied.<\/p>\n

But the most overlooked expense is often the largest: opportunity cost.<\/p>\n

Every month a building sits vacant is a month of rent that can never be recovered. Unlike many businesses where lost revenue can potentially be made up later, industrial real estate doesn\u2019t work that way. A missed month of occupancy is permanently lost income.<\/p>\n

\n<\/div>\n

Consider a 25,000-square-foot industrial building leasing for approximately $1.50 per square foot. One month of vacancy represents nearly $38,000 in lost gross revenue. Six months? More than $225,000 gone forever \u2014 before considering tenant improvements, commissions, free rent and carrying costs.<\/p>\n

And therein lies the challenge many owners face today.<\/p>\n

Landlords remain anchored to yesterday\u2019s market while tenants have become increasingly selective and deliberate. The result is a widening gap between expectation and reality. Owners resist lowering asking rents or offering concessions because they fear \u201cleaving money on the table.\u201d Yet in many cases, the larger financial mistake is waiting too long to respond to market conditions.<\/p>\n

Pricing a vacancy correctly at the beginning of a marketing cycle is almost always less expensive than chasing the market downward six months later.<\/p>\n

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\n<\/div>\n

I\u2019ve also noticed another emerging trend.<\/p>\n

Tenants today are spending far more time evaluating decisions. During the post-pandemic industrial surge, occupants often toured a building on Monday and submitted an offer by Friday. Today, the process resembles a chess match rather than a sprint.<\/p>\n

Companies are carefully analyzing labor costs, tariffs, supply chains, interest rates, inventory levels and broader economic uncertainty before committing.<\/p>\n

That caution impacts landlords directly.<\/p>\n

The cost to originate a tenant has risen dramatically. Leasing commissions, tenant improvement allowances, free rent periods, legal negotiations, architectural reviews, and extended downtime all contribute to the equation. In many cases, replacing a tenant today can cost hundreds of thousands of dollars before the first rent check arrives.<\/p>\n

Which is why tenant retention has become more important than ever.<\/p>\n

Sometimes the best deal isn\u2019t pushing aggressively for every possible rent increase. Sometimes it means working collaboratively with an existing tenant to preserve occupancy, maintain cash flow, and avoid the substantial frictional costs associated with vacancy.<\/p>\n

A vacant building creates stress. An occupied building creates options.<\/p>\n

The industrial market will eventually regain stronger momentum. Southern California remains one of the most supply-constrained and economically dynamic industrial markets in the world. Manufacturing, logistics, and distribution demand will continue to evolve. But in the meantime, owners would be wise to carefully calculate not only the visible cost of vacancy, but also the invisible one.<\/p>\n

Because waiting can become very expensive.<\/p>\n

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104.<\/em><\/p>\n

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