Amazon alone helped to push down the industrial vacancy rate in Orange County even further. According to a recent market report from Newmark Knight Frank, Amazon signed nearly 1 million square feet of industrial leases in 2019, helping to keep the industrial vacancy rate below 4% for the 25^th consecutive quarter.

"Amazon had a tremendous impact on the overall industrial market in 2019, having finalized nearly 1 million square feet of leases in three transactions alone during the calendar year," Jeff Read, executive managing director at NKF, tells GlobeSt.com. "Not surprisingly, Amazon was responsible for a majority of the overall absorption for the year as they execute on their push to satisfy "last-mile" distribution to consumers in mature infill markets like Orange County. Based upon multiple pending transactions, we anticipate that Amazon will have a similar impact on industrial absorption in 2020 as well."

It isn't only Amazon. Ecommerce companies overall are driving the industrial leasing activity in Orange County; however, they aren't the only players for industrial, particularly in smaller size ranges. "Generally speaking, yes, ecommerce-oriented users made up the majority of activity throughout the year, across all size ranges," Read says. "While Amazon and other large corporate users impacted the market for buildings in the size range 50,000 square feet and greater, we saw significant activity from smaller, "mom and pop" ecommerce businesses in the size range 25,000 square feet and smaller."

In addition, Amazon and other ecommerce companies also drive acillary businesses that also use industrial space. Those companies are growing in Orange County. "We continually saw activity from import/export distributors coming in from overseas looking to establish U.S.-based operations," says Read. "Many are actually doing business with Amazon in some capacity."

As a result, there has been strong activity in all size ranges in Orange County. "Due to very limited supply, tenants often had to extend their geographic parameters in order to satisfy expansion requirements," says Read. "The largest industrial submarket, North County, totaling nearly 104 million square feet, typically sees the most activity simply due to having the deepest supply of dock-high, warehouse/distribution-oriented product, which is most conducive for ecommerce uses.  For the calendar year 2019, North Orange County dominated in terms of overall absorption, totaling over 700,000 square feet."

The outlook for 2020 is similar to 2019, and highly optimistic. "Barring some sort of "black swan" event in the geopolitical arena, it is our feeling that 2020 leasing activity will be every bit as strong as 2019," says Read. "Vacancy is likely to remain at historically low levels, but with new product to be delivered by Sares Regis, 610,000 square feet of space in Huntington Beach, and Shea, 500,000 square feet of space in Santa Ana, there should be ample supply to satisfy demand in the coming year."