has been slumping since early last year,

The vacancy rate in the county's 247-million-sf industrial market increased to 3.8% in the quarter from 3.1% in the second quarter, and the availability rate rose to 7.5% from last quarter's 6.8%, according to CBRE. Voit Commercial Brokerage cites similar figures, reporting that the vacancy rate reached 4.38% in the quarter—compared with 3.82% a year ago—while the availability rate rose to 7.86% versus 5.93% a year ago. While the vacancies are substantially lower than those in the office market, industrial vacancies typically run lower than office statistics.

Voit pegs the negative net absorption in the county's industrial market at a far lower number than CBRE, only 26,101 sf, but the two companies' reports are difficult to compare in some respects because they track different inventories and have different methods for accounting for space. Voit, for example, separates out R&D space from manufacturing/distribution space, which accounts for some of the differences in the two firms' figures. In general terms, however, both firms report Orange County industrial numbers this year that represent a change of direction for a market that has perennially been one of the strongest in the nation. CBRE notes that, based on square footage, industrial leases in the third quarter were approximately 13% smaller on average than in the third quarter of 2007.

CBRE points out that a significant number of transactions in the third quarter involved tenants opting to renew existing leases utilizing a "wait and see" approach, and Voit offers a similar analysis, saying "The recent drop in activity is mostly a result of hesitancy in the marketplace from the continuous stream of negative news in a wide area of topics, most notably the credit crunch."