— By Wes Hunnicutt of Stream Realty Partners —
The Orange County industrial market is showing signs of stabilization through the first half of 2026 after experiencing more challenging conditions throughout 2025. Vacancy has increased from the historic lows seen during the pandemic-driven expansion cycle and is currently hovering around 5.5 percent, while asking lease rates have begun to stabilize following a significant correction from the record highs achieved in 2023.
Since the beginning of 2025, more than 3 million square feet of new Class A industrial inventory has been delivered throughout Orange County, representing more than 20 industrial distribution development projects. While these developments have elevated overall market availability, leasing activity within the newly delivered product has been slower than anticipated. Many of these buildings have remained vacant for 10 months or more after completion, reflecting a narrower pool of tenants able to justify the occupancy costs associated with large, modern industrial facilities.
Notable leasing transactions within recently delivered Class A developments include:
— Anduril Industries’ 177,766-square-foot lease at 1100 Valencia Ave. in Tustin
— Anduril Industries’ 162,656-square-foot lease at 3100 South Harbor Blvd. in Santa Ana
— Hyper Solutions’ 100,784-square-foot lease at 2100 East Howell Ave. in Anaheim
— Axis Product Development’s 99,200-square-foot lease at 752 North Poplar Street in Orange
Over the past decade, many traditional distribution and logistics users have migrated to the Inland Empire in search of lower occupancy costs and a larger supply of modern industrial facilities. While Orange County offers superior proximity to the ports of Los Angeles and Long Beach, rental rates for Class A industrial space can exceed those of comparable Inland Empire facilities by more than $1 per square foot, per month. As a result, Orange County has increasingly evolved into a market driven by manufacturing, aerospace, medical device, defense and technology-oriented occupiers rather than pure logistics users.
A notable trend emerging in 2026 is the growing importance of electrical infrastructure as a key site-selection criterion. Demand from aerospace, advanced manufacturing, semiconductor, defense, artificial intelligence and other highly specialized users has shifted attention toward facilities capable of supporting significant power requirements. As a result, modern Class A buildings with robust electrical capacity — often featuring 4,000 amps or more of delivered power — are experiencing stronger tenant interest.
Conversely, many Class B industrial properties face competitive challenges. Older facilities frequently lack the power capacity, clear heights, loading configurations and overall building image required by these emerging industries. While Class B assets continue to serve a broad range of traditional industrial users, the widening gap in functionality between older and newer product is becoming increasingly apparent.
Looking ahead, Orange County’s long-term industrial fundamentals remain compelling. Development opportunities remain limited by land constraints and high barriers to entry, while the region continues to benefit from a skilled labor force and proximity to major transportation infrastructure. Leasing velocity for large Class A developments may remain uneven in the near term, but growing demand from aerospace, defense, advanced manufacturing and technology-related occupiers should continue to support absorption and contribute to a healthier market environment through the remainder of 2026 and beyond.
— By Wes Hunnicutt, executive vice president of Stream Realty Partners. This article was originally published in the July 2026 issue of Western Real Estate Business.