Construction of speculative industrial buildings in Orange County was in full swing during the first quarter, though construction of speculative offices had yet to begin and retail remained slow.
Commercial property under construction as a whole totaled nearly 2.6 million square feet at the end of the quarter.
Office-sector construction was all build-to-suits, and there was about 71% less space under development than there was at the end of 2006.
More office projects are on the way after several major projects were completed in the first quarter, including the new headquarters in Newport Center for Pacific Investment Management Co. that added 380,000 square feet to the market base.
The Irvine Company is building at 520 Newport Center Drive, which it has recently been marketing to outside tenants. The building may be completed as early as late 2014.
Other projects are expected to break ground in the coming months, displaying a return of confidence of developers and lenders in the office market.
Construction of retail space in the county remained minimal. The regional center in Buena Park named The Source remained under construction, and some development occurred in the small-center and single-tenant arena of less than 50,000 square feet.
Two freestanding retail buildings broke ground in the third quarter of 2013 and remain under construction, bringing the total for Orange County to 710,208 square feet.
Renovations and expansions designed to enhance and improve existing centers are occurring in the market, although no centers have been added to Orange County’s retail inventory in four years. Other formerly active development projects remained on hold or have been indefinitely frozen.
The industrial sector experienced the most construction activity, increasing significantly from just a year ago, though development in the county is challenging due to competition from residential developers and the high cost of land.
North Orange County was the only submarket with construction in the past 12 months, with the Anaheim Concourse Distribution Center, which has 864,794 square feet under construction.
Two construction projects commenced during the first quarter, adding 237,000 square feet of development, including a 93,000-square-foot building that broke ground at 4850 E. La Palma Ave. in Anaheim.
The West OC submarket added to the construction number, with two buildings totaling 144,754 square feet that broke ground in Huntington Beach.
Research and analysis provided by CBRE Research
