ORANGE COUNTY, CA—Focus on last mile delivery, as well as the vastly different operating expenses in California due to Prop. 13 reassessments, are two of the biggest issues on Orange County industrial tenants' minds, Cushman & Wakefield's Tina Arambulo, industrial re and Kevin Turner tell GlobeSt.com. With strong leasing and occupancy numbers for the third quarter, according to a recent report from the firm, this sector shows no signs of slowing down. We spoke with Arambulo and Turner about any concerns in the market and takeaways from this research.

GlobeSt.com: What are some of the latest concerns in the Orange County industrial market?
Arambulo: With industrial vacancy at sub 2% in Orange County, such a tight market also means users have relatively few alternatives to meet their occupancy needs—Orange County remains one of the most constrained markets when it comes to industrial supply. Further, this market has significant barriers to entry for development of new industrial product. As such, despite the continued strong demand, a lack of available inventory continues to limit transactional volume and therefore inhibit growth.

As the e-commerce industry continues to evolve, space demands are shifting as companies place more focus on the “last mile”—which will remain a primary generator of demand ahead. For e-commerce firms in particular, industrial-space needs are less about the cost of their real estate and more about transportation costs. There is a significant amount of product considered obsolete and not suitable for modern distribution use as e-commerce and 3PL firms continue to seek modern facilities with clear heights of over 32 feet. And while well-located class-B product can sometimes provide a viable option, much of the county's lesser-classed supply may not.