Orange County Warehouse Market Report 2025: Your Guide to Southern California Industrial Space
Last Updated: December 2025
If you’re looking for warehouse space in Orange County, you’re entering the most expensive industrial market in the entire United States – and one where market dynamics are finally shifting in tenants’ favor. After years of record-low vacancy and astronomical rent growth, OC is experiencing a normalization that’s creating opportunities for businesses willing to act strategically.
Let me walk you through what’s really happening in this market, from Anaheim’s logistics corridors to Irvine’s premium flex spaces. Whether you’re a small business owner looking for warehouse space near the ports or a broker helping clients navigate Southern California’s industrial landscape, here’s what you need to know.
Why Orange County Commands Premium Pricing
MARKET SNAPSHOT: ORANGE COUNTY WAREHOUSE FACTS
| Metric | Value |
|---|---|
| Average Lease Rate | $17.09/sq ft (all industrial, 2025) |
| New Lease Rate | $19.00/sq ft (recent transactions) |
| Current Vacancy | 5.5% (Q3 2025) |
| Historical Vacancy Average | 4.2% (20-year average) |
| Net Absorption (Trailing 12 Months) | -1.1 million sq ft |
| Sale Price | $306/sq ft (YTD 2025, 2nd highest nationally) |
| County Population | 3.19 million |
The numbers tell part of the story, but here’s what they mean for you: Orange County ranks #1 nationwide for industrial rent, where new tenants pay $19 per square foot – tops in the nation. This is a supply-constrained market with the highest warehouse leasing rates in the region. There’s simply no new land to develop, which keeps a structural floor under rents even as the market softens.
But here’s the opportunity: After vacancy bottomed at a record-low 1.8% in Q4 2022, we’ve seen 11 consecutive quarters of vacancy increases. At 5.5% direct vacancy in Q3 2025, landlords are finally offering concessions. If you’ve been priced out of Orange County for years, this is your window.
The Submarkets That Matter Most
North County: Anaheim, Fullerton, Garden Grove
This is Orange County’s industrial workhorse. The I-5 and I-405 corridors provide direct access to the Ports of Los Angeles and Long Beach, making North County the logical choice for import/export operations and distribution.
Key characteristics:
- New construction concentrated here – the 91 Freeway and I-5 access create logistics corridor advantages
- Average rates: $11-16/sq ft (lower than South County)
- The largest project underway: 237,246 sq ft Class A warehouse in Anaheim, delivering July 2025, estimated rent $11-14/sq ft
- Recent deal: Motion Industries signed a 10-year lease for 62,717 sq ft at 3373 E. La Palma Ave., Anaheim – $1.72/sq ft NNN after concessions
North County offers relative value within Orange County’s premium market. If you need functional distribution space without South County’s sticker shock, focus here.
Central County: Santa Ana, Orange, Tustin
Santa Ana continues to serve as an industrial hub given its central location and excellent I-5/I-405 access. You’ll find a mix of older Class B buildings and some newer product.
Key characteristics:
- Central positioning for county-wide distribution
- Mix of price points based on building age and class
- Growing sublease opportunities as companies right-size
South County: Irvine, Lake Forest, Irvine Spectrum
The newest construction stretches across the southern area, particularly around Irvine Spectrum Center. This is premium territory – expect to pay accordingly.
Key characteristics:
- Highest rental rates in the county ($18-22+/sq ft)
- Newer Class A product with modern amenities
- Strong appeal for R&D, tech manufacturing, and high-value distribution
- Limited availability due to land constraints
Airport Area (Greater Airport Area – GAA)
The airport submarket posted the highest vacancy in Q4 2024 at 3.6%, with rates forecasted to increase through Q1 2025 as new construction delivered vacant. By Q1 2025, airport area vacancy rose to 6.1%, up from 4.1% year-over-year.
What Small Businesses Need to Know
The market shift is creating real opportunities for smaller users. While headlines focus on negative net absorption and rising vacancy, the under-20,000 sq ft segment tells a different story – leasing activity actually picked up notably in Q3 2025 for smaller spaces.
Your advantages in this market:
- Tenant leverage is improving – Landlords are lowering rents and offering concessions for the first time in years
- Sublease opportunities – 1.2 million sq ft of sublease space available as e-commerce companies right-size
- Workforce quality – 36% of California adults hold bachelor’s degrees or higher (vs. 33% nationally)
- Port proximity – Direct access to America’s busiest port complex
- Venture capital ecosystem – Orange County startups tap into Bay Area funding networks
Watch out for:
- Still the nation’s most expensive market – Even with softening, you’re paying premium rates
- Inland Empire alternative – The IE offers 7.7% vacancy and significantly lower rents; factor in your distribution needs
- Tariff uncertainty – Longer decision-making timelines as companies await clarity on trade policy
- Traffic reality – Factor in workforce commute times, especially for South County locations
- Sublease competition – Some sublease spaces offer significant discounts; know your comps
The Normalization Story
What Happened to the 1.8% Vacancy Market?
Orange County experienced a seismic shift from the ultra-tight conditions of 2021-2022. Here’s the trajectory:
| Period | Vacancy Rate |
|---|---|
| Q4 2022 | 1.8% (record low) |
| Q1 2024 | 4.1% |
| Q4 2024 | 3.4% |
| Q1 2025 | 4.8% |
| Q3 2025 | 5.1-5.5% |
This isn’t market collapse – it’s normalization. The county’s 20-year vacancy average is 4.2%, well below the national 20-year average of 7.1%. Current conditions simply represent a return to historical norms after an unprecedented tightening cycle.
Why Tenants Are Getting Leverage
- Rent growth turned negative: -1.3% in Q1 2025, with rates down 6.3% year-over-year by Q3 2025
- Asking rent dropped to $1.49/sq ft NNN in Q3 2025
- Sublease space surged 227% year-over-year by Q1 2024
- Landlords offering concessions on properties for the first time in years
- Tenants considering relocation rather than renewal as rates soften
Real Numbers from Real Deals
Q1 2025 Notable Transaction:
Motion Industries – 62,717 sq ft, 10-year lease at 3373 E. La Palma Ave., Anaheim
- Effective rent: $1.72/sq ft NNN (after concessions)
- Demonstrates concession availability in current market
Rate Ranges by Submarket:
| Submarket | Rate Range ($/sq ft NNN) |
|---|---|
| South County/Irvine | $18-22+ |
| Airport Area | $16-20 |
| Central County | $14-18 |
| North County (Anaheim, Fullerton) | $11-16 |
| Sublease Opportunities | Significant discounts available |
Sale Prices:
Orange County industrial properties traded at $306/sq ft YTD through September 2025 – the second-highest in the nation.
Regional Context: OC vs. Inland Empire
Many Orange County businesses face a strategic choice: pay premium OC rates or move east to the Inland Empire.
| Factor | Orange County | Inland Empire |
|---|---|---|
| Average Rent | $17.09/sq ft | Lower |
| Vacancy | 5.5% | 7.7% |
| Port Proximity | Excellent | Good |
| Land Availability | Severely constrained | More options |
| New Construction | Limited | Active |
| Workforce Commute | Shorter for OC residents | Longer |
The IE absorbed three major Amazon leases in 2024, each exceeding 1 million sq ft. For large-footprint distribution, the math often favors the Inland Empire. For last-mile delivery, tech manufacturing, or OC customer proximity, paying the Orange County premium may make sense.
Looking Ahead: What’s Coming in 2025-2026
The Good:
- Leasing activity picking up for buildings under 20,000 sq ft
- Tenant leverage improving with concessions becoming standard
- Sublease options provide entry points for cost-conscious users
- Supply constraints maintain structural floor under rents
- Premium location fundamentals haven’t changed – ports, airports, highways, workforce
The Challenges:
- Negative net absorption continues (-1.1 million sq ft trailing 12 months)
- Vacancy likely to keep rising as new construction delivers
- Larger space demand subdued until economic clarity improves
- Tariff uncertainty extending decision timelines
- California regulatory environment continues to add operational costs
Making Your Move: Practical Next Steps
If you’re a small business owner:
- Act now – This is the best tenant market in years; conditions will eventually tighten
- Explore sublease options – 1.2 million sq ft available, often at significant discounts
- Focus on North County for better value while maintaining logistics access
- Negotiate aggressively – Landlords are offering concessions; ask for free rent, TI allowances
- Consider relocation vs. renewal – Softening rates may make moving worthwhile
- Compare IE alternatives – Run the numbers on Inland Empire for larger footprints
- Factor in total costs – California wages, utilities, and regulations impact bottom line
If you’re a broker:
- Lead with market shift narrative – Tenants have leverage they haven’t had in years
- Quantify concession values – Show clients the true effective rent after TI and free rent
- Present sublease options alongside direct deals
- Prepare IE comparison analyses – Clients will ask
- Emphasize timing – Current window won’t last forever
- Segment by size – Under-20,000 sq ft market is actually heating up
The Bottom Line
Orange County remains the nation’s most expensive industrial market for a reason: there’s simply no land to build on, and proximity to America’s busiest port complex commands a premium. But for the first time in years, the market is working in tenants’ favor.
Vacancy has risen from 1.8% to 5.5%. Rents are down 6.3% year-over-year. Landlords are offering concessions. Sublease space abounds. If you’ve been waiting for an opportunity to enter or expand in Orange County, this is it.
The fundamentals haven’t changed – Orange County still offers unmatched port access, an educated workforce, and proximity to Southern California’s massive consumer market. What’s changed is bargaining power. Use it while you have it.
For businesses that need to be in Orange County, the math finally works. For those with flexibility, compare IE options carefully. Either way, now is the time to act.
