Sean Ward, first vice president of CBRE, said industrial property vacancy rates in Orange County dropped to 2008 levels at 3.4%. “Industrial property is trending upward both in lease and sale rates, buoyed by a strong second half of 2011 and a dwindling supply of large spaces.” For 2012, he continued, industrial rental growth is expected while office product is projected to lag. “A strong appetite for acquisition will continue from value added and institutional investors,” Ward said.

Activity increased overall along with aggressive sale pricing in the Northwest submarket, featuring the San Fernando Valley, explained Jeff Puffer, senior vice president of Delphi Business Properties Inc., who reported that “Business is improving in the region, so we believe that 2012 will be marked by low vacancy rates, a stabilized leasing market with more long-term leases, sale prices declining, and investors coming back to market.”

According to Grant Harris, senior vice president, Lee & Associates-LA North/Ventura Inc., the Ventura County region saw activity pick up dramatically in the second half of last year. “It was the most consistent activity I’ve experienced in several years,” he said. Harris forecast steady, slow recovery for 2012 with industrial lease rates and sales prices beginning to stabilize sparked by “a resurgence of high tech companies.” He also said vacancy rates for industrial buildings will continue to fall due to production scarcity.

Strong absorption of industrial property was experienced in the Eastern region throughout 2011, according to Rustin Mork, senior associate for Binswanger/Realty Advisory Group. “Meanwhile, institutional interest in industrial space is at “an all-time high,” while demand and pricing increased steadily through the third quarter of 2011. We expect similar conditions in 2012, plus a visible increase in new construction,” Mork said.

The Mid-Counties submarket has registered seven straight quarters of positive absorption, according to Chuck Wilson, senior vice president of Colliers International. “The market seems to have hit bottom,” he said. “We see increasing owner/user purchase demand helped by historic low interest rates, tightening inventory, and investor demand for quality buildings.”

For the Inland Empire, “Bigger is better,” said Joey Sugar, first vice president of CBRE, who pointed out that demand for buildings of 500,000 square feet or more was robust in 2011, “helping to drive down availability and vacancy rates.”

For industrial in the South Bay market, Frank Schulz, VP for the Klabin Co./CORFAC International, industrial activity is up significantly. He said the vacancy rate is 5% with 1.1 million square feet of space absorbed in 2011. He added that lease rates will continue to rise and that owner users “will have a tough time competing with investors for buildings as higher rents and lower cap rates increase the pricing threshold.”

Stating that the Westside submarket is primarily comprised of office space, Tibor Lody, vice president of the Klabin Co./CORFAC International, said “Capital is chasing few deals” and vacancy rates are down—13% for creative office and 15.8% for the total market. Lody said the creative office market characterizes the submarket with over one million square feet of this space under construction.