Orange County Industrial Deep Dive with Industry Veterans Jay Tanjuan & Sean Ward
Last month I wrote about following the federal money, how defense and aerospace are quietly becoming the demand engine for SoCal industrial. On the latest Industrial Insights, I brought that thesis to two people who live it every day with me: Jay Tanjuan of Scannell Properties, on the development side, and Sean Ward, a 23 year CBRE veteran. We all started the business around the same time and between the three of us, that's six decades in this market.
The clearest takeaway: Orange County industrial isn't telling one story right now. It's running at two speeds. One speed is advanced manufacturing, fast, paying record rents, redefining what a desirable building looks like. The other is traditional warehouse and distribution, still working through a correction four years in the making.
Takeaways for Your Operation
-- The demand engine has rotated from logistics to manufacturing. If you still read industrial through the lens of consumer freight and port volume, you're watching the wrong screen. Last year the ports moved record volume while vacancy kept climbing, that freight increasingly goes straight to rail and out of the region. The growth now is federal and industrial: defense, aerospace, and the supplier tail that has to sit close to the program. Watch the clip.
-- Manufacturing capable space is its own market. Power, ground-level loading, a secure yard, and proximity to labor matter more to these tenants than 36' clear height. That product never softened the way big-box distribution did. Meanwhile the distribution tenants who do want height are hunting a shrinking pool, less than a million square feet is under construction in all of Orange County.
-- The credit conversation has changed and astute owners are winning. Defense and government contract tenants come with a wrinkle: the funding behind the rent can move. A contract awarded in year one of a five-year lease isn't guaranteed to still be funded in year four. The owners getting these deals done aren't the ones avoiding that risk, they're the ones who've gotten smart about pricing it. As Sean put it: "Landlords are open to taking calculated risks with tenants and their credit today. You have to be. You're staring at many months, I hate even to say it, but years, of vacancy in the face." His example: an EV startup with shaky financials leased 120,000 square feet on a five year deal, structured with a full year of prepaid rent up front. It folded at 18 months, but the landlord got the building back with cash in hand, at a rate above today's market, in a market where the alternative was likely sitting vacant the whole time anyway. Watch the clip.
-- The broad market still favors tenants. Outside the advanced manufacturing pockets, you have more options, real concessions, and room to push on rate that didn't exist eighteen to twenty four months ago. Rents have come off their peak for eleven straight quarters. If your business touches this supply chain, you can position near the work from a position of strength instead of paying up for it. Watch the clip.
-- Capital is patient so the deals that get done have a story. As Jay said, "By the time you get comfortable, it's already a little bit too late. The market's already humming." Most LP capital is still cautious; the money that's moving wants a defensible story you can back up with lease rates. It all starts with leasing, and leasing is surging even as the headline absorption numbers lag. Watch the clip.
-- If you own your building, the tax math just changed. One hundred percent bonus depreciation is back in full under the 2025 One big Beautiful Bill Act. Pair that with pricing off its peak and a cost segregation study, and buying a manufacturing building can beat leasing it with real dollars back in your first year.
Our team has spent 22 years advising supply chain operators on real estate across OC, LA, IE and increasingly nationwide. The operators who win are the ones who read the demand a year before it shows up in the rent.
Watch the Full Episode
Want to know which market your building is in?
Reply to this email and I'll pull the advanced-manufacturing and federal activity landing near your facility, the five closest comparable availabilities within fifty percent of your size, and current $PSF. One page, specific to your footprint. No cost, no obligation. Just the numbers. Justin
Justin Smith, SIOR
MBA, MRED, MCR, Masters of Supply Chain Management
Senior Vice President | Principal
Lee & Associates | Irvine
C 949.400.4786
jbsmith@lee-associates.com (mailto:jbsmith@lee-associates.com)
Corporate ID 0104791 | License ID 01504494
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