Market Summary
- Demand Softening: Industrial demand continued to ease in Q3, with negative net absorption of -850,291 SF — the largest quarterly loss in 2025 and the 11th consecutive quarter of tenant contraction.
- Vacancy Surge: Countywide vacancy rose to 6.6%, the highest since the Great Recession (up from 1.8% over the past 11 quarters).
- Lease Rates Declining: Average NNN asking rate fell to $18.12 PSF (down from $19.20 PSF in Q3 2024).
- Tenant Concessions at Peak: Landlords offering maximum incentives to attract tenants.
- Bright Spot: Increased activity in 100,000–200,000 SF distribution & manufacturing spaces.
Key Market Indicators (Q3 2025 vs Prior Quarters)
| Metric | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Trend |
|---|
| Net Absorption (SF) | (869,033) | (420,054) | (797,474) | (876,049) | (1,295,787) | ↓ |
| Vacancy Rate | 6.20% | 5.70% | 5.60% | 5.20% | 4.80% | ↑ |
| Avg NNN Asking Rate (PSF) | $18.12 | $18.36 | $18.48 | $19.08 | $19.20 | ↓ |
| Sale Price PSF | $343 | $330 | $355 | $339 | $310 | ↑ |
| Cap Rate | 6.19% | 5.46% | 5.17% | 4.29% | 5.35% | ↑ |
| Under Construction (SF) | 2,016,912 | 2,657,851 | 2,340,604 | 2,073,482 | 1,929,705 | ↓ |
| Total Inventory (SF) | 304.2M | 303.5M | 303.4M | 303.0M | 302.8M | ↑ |
Top Lease Transactions (by SF)
| Address | Size (SF) | Landlord | Tenant | Industry |
|---|
| 2060 N. Batavia St, Orange | 225,204 | Prologis | Undisclosed | Undisclosed |
| 3130-3100 S. Harbor Blvd, Santa Ana | 162,656 | Emerald & Dune RE Partners | Anduril Industries | Manufacturing |
| 4260 N. Harbor Blvd, Fullerton | 141,616 | Prologis | 180 Snacks | Nut Butter Mfg |
Top Sale Transactions (by SF)
| Address | Size (SF) | Sale Price | PSF | Buyer | Seller | Class |
|---|
| Caballero Blvd, Buena Park | 274,170 | $60.9M | $222 | Elion Partners | AEW Capital | C |
| 17731 Cowan, Irvine | 54,088 | $30.65M | $567 | Orange Bakery, Inc. | Xebec | A |
| 6259 Descanso Ave, Buena Park | 54,000 | $17.4M | $322 | Toro Enterprises | Fortress Inv. | C |
Outlook
- Rising vacancy and falling rents signal a tenant-favorable market.
- Sales activity remains resilient, with average sale prices up 10% YoY despite higher cap rates.
- Construction pipeline cooling (down ~24% from Q2), potentially stabilizing supply in 2026.
Source: Lee & Associates Research, CoStar, U.S. Bureau of Labor Statistics | © 2025
