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Santa Ana Redhill Development <br /> <br /> <br /> <br /> <br />Prepared for: City of Santa Ana <br /> <br />AECOM <br />13 <br /> <br /> <br />Figure 5: Industrial Vacancy <br /> <br />Source: Costar, BLS, AECOM <br /> <br />The industrial vacancy rates for the 2-mile radius have consistently tracked those of the Orange County market as a <br />whole and, as of 2018, were lower (2.7%) than that of Orange County (3.7%). These vacancy rates have remained <br />relatively stable since 2000 with slight fluctuations that correlate with periods of recession. Despite relative economic <br />downturns, the vacancy rate has remained below the industry standard full structural occupancy rate of 10% <br />associated with industrial uses. This indicates a healthy industrial market. <br />Similarly, industrial rent in the 2-mile radius has been historically similar or higher than that of Orange County through <br />2016. The rent (NNN/SF/year) in Orange County was higher ($10.83) than that of the 2-mile radius ($9.74) at the end <br />of 2018. A Triple Net lease (NNN) is a lease agreement wherein the tenant pays all property expenses (taxes, <br />insurance, maintenance) in addition to rent and utilities. NNN agreements are typical of industrial and retail properties <br />that rent to a variety of businesses with different demands on the property. <br />Adjusted for inflation, industrial rent increased 24% in the 2-Mile Radius and 44% in Orange County from 2010-2018, <br />again indicating a healthy industrial market. <br /> <br />Table 5: Industrial Inventory and Growth 2000-19 <br />Industrial Inventory and Growth 2000-2019 <br /> 2-Mile Radius Orange County <br />Inventory 28,456,795 232,289,991 <br />Share of OC 12% 100% <br />Growth 2010-19 (SF) 51,450 6,482,042 <br />Growth 2010-19 (%) 0.2% 2.8% <br />Share of OC Growth 0.8% 100% <br />Source: Costar, AECOM <br /> <br />The 2-mile radius represents a significant portion (12%) of Orange County’s total industrial inventory; however, <br />growth has been minimal since 2010 (<1%). <br />While the Orange County growth of industrial space has been more robust in the same timeframe i t has also not <br />grown substantially. This trend is largely consistent with national transformational trends in the industrial and <br />manufacturing market where employment growth has generally been tepid as a result of increasing automation. This <br />has dampened the demand for traditional industrial space in recent years even as output has grown substantially. <br /> <br />$9.74 <br />$10.83 <br />$0.00 <br />$2.00 <br />$4.00 <br />$6.00 <br />$8.00 <br />$10.00 <br />$12.00 <br />$14.00 <br />2000 2002 2004 2006 2008 2010 2012 2014 2016 20182019 Inflation Adjusted DollarsIndustrial Rent (NNN/SF/Year) <br />2-Mile Radius Orange County <br />3-240