Orange County Industrial Real Estate Market Update Q1 2026 with Jay Tanjuan of Scannell Properties & Sean Ward of CBRE

Three Southern California industrial veterans — Jay Tanjuan of Scannell Properties, Sean Ward of CBRE, and host Justin Smith of Lee & Associates — sit down to break down where the Orange County industrial market actually sits in Q1 2026. Each has spent more than two decades in SoCal industrial, riding every cycle from the early 2000s through the COVID boom and the current reset.

The conversation lands on a few specific takeaways. Tenants didn't leave OC — they renegotiated. Advanced manufacturing (defense, aerospace, AI, energy, robotics) is rapidly becoming the dominant demand story. Three site attributes now drive every meaningful lease: proximity to labor, power, and parking. Land values are down 60 to 70 percent from the 2022 peak, which means the underwriting math actually works for the first time in two years. And only 2.7% of OC's existing industrial inventory is 36' clear or better — making the right kind of building genuinely scarce.

Plus: the port-volumes-vs-vacancy disconnect, what landlords now demand to underwrite startup credit, where institutional capital is finally returning, Scannell's 10,000-amp project in Garden Grove, and bold predictions for humanoid robots in warehouses by 2027 — or sooner.

Key Takeaways

• Advanced manufacturing is now the dominant OC industrial demand story. Defense, aerospace, AI, energy, and robotics tenants are signing the biggest leases in the market. Velar Atomics — a small modular nuclear reactor company with fewer than 50 employees — just leased 500,000 SF.
• The Three Ps drive every advanced manufacturing site decision: Labor, Power, Parking. These tenants are paying north of $2 NNN to be in the right pocket of OC or LA — and they won't compromise on any of the three.
• Only 2.7% of Orange County industrial inventory is 36' clear or higher. Modern-spec product is genuinely scarce, and the buildings that fit what these tenants need are getting harder to find.
• Land values are down 60-70% from the 2022 peak. The underwriting math actually works for the first time in two years. New development sites are coming to market weekly as other groups exit projects.
• The five-year renewal wave is hitting now. Tenants who signed in 2020-2022 are deciding to grow, contract, or stay flat — and that decision will shape OC absorption over the next 18 months.
• Power is the new constraint. Scannell's Garden Grove project delivers with 10,000 amps of power — increasingly the only spec advanced manufacturing tenants will sign for.
• Jay Tanjuan's call: "Now's the time to take action." Lease rates have stabilized, basis is down, the right kind of building is scarce, and capital is finally starting to lean in.

Chapters

• 00:41 Jay Tanjuan & Sean Ward: 20+ years in SoCal industrial
• 03:44 The market today vs. 12-18 months ago
• 04:13 Liberation Day 2025 and the slowdown
• 06:00 Underwriting: a flurry of new development deals
• 08:25 Land values down 60-70% from the 2022 peak
• 09:00 The dominant story: Advanced Manufacturing
• 09:46 Velar Atomics: 50 employees, 500,000 SF
• 12:17 The Three Ps — Labor, Power, Parking
• 13:00 Record port volumes, rising vacancy: the disconnect
• 16:00 The 3PL spot market and excess capacity
• 17:21 Right-sizing the 2020-2022 build wave
• 18:28 The five-year renewal wave hitting now
• 20:00 Only 2.7% of OC industrial is 36' clear or higher
• 21:54 COVID-era: rents up 5% a month
• 23:39 "COVID gave landlords a PhD in raising rent"
• 25:33 Talent, AI, and why people still want to be in OC
• 26:30 The capital intensity of advanced manufacturing tenants
• 27:22 Tracking defense contractor announcements as a leading indicator
• 29:15 Scannell's Garden Grove project: 10,000 amps of power
• 29:54 Underwriting defense contractor credit
• 32:54 The EV tenant deal: a year of prepaid rent
• 33:47 LP capital cautiousness on development
• 35:33 "We bottomed out" — Jay's call on OC lease rates
• 36:45 "Site has to have a story" — Jay's underwriting framework
• 40:37 Rent disparity by tenant type: $2+ NNN vs. market
• 42:32 Power generation creativity: modular nuclear, on-site generation
• 44:00 AI, robots, and the next cycle
• 45:10 Hot take: When does a humanoid robot show up in a warehouse?
• 47:30 From dots on tour-book maps to self-driving cars

Episode Resources

Connect with Jay Tanjuan, CCIM — Director of Development, Southern California, Scannell Properties

• https://www.linkedin.com/in/jaytanjuan/
• https://www.linkedin.com/company/scannell-properties/
• https://scannellproperties.com/

Connect with Sean Ward — Executive Vice President, CBRE | SoCal Industrial

• https://www.linkedin.com/in/sean-ward-ab616a8/
• https://www.linkedin.com/company/cbre/
• https://www.cbre.com/

Connect with Justin Smith, SIOR - Lee & Associates Irvine

• https://smithcre.com/
• jbsmith@leeirvine.com
• https://www.linkedin.com/in/justinbsmith/
• 949.400.4786