IRVINE, CA—With ever-shrinking vacancy rates in both the office and industrial sectors of Orange County, development is the next logical step. But Voit Real Estate Services' VP of market research Jerry Holdner tells GlobeSt.com finding land to construct new buildings is a major challenge for developers.

As GlobeSt.com reported last week, the Orange County office market showed continued signs of recovery in the third quarter of 2014, posting just under 600,000 square feet of positive net absorption, and the county's industrial market showed significant positive absorption for the year with a two-cent or 3.2% increase in asking lease rates and drops in both vacancy and availability, according to Voit. And Holdner tells GlobeSt.com the office vacancy rate is at 12.5%, and 12% is the point at which the cranes typically come out.

“The industrial vacancy rate is the lowest it's ever been,” says Holdner. “I had to go back to the second quarter of '98 to find the same amount of vacant space. We're going to probably see more construction; the problem is finding sites to build these buildings. Most of the larger industrial sites have been converted to condominium high-rises. The demand is definitely there, though, and once lease rates get high enough and it pencils, we'll see a lot of older buildings bought and scraped or just improved.”