Commercial property under construction in Orange County totaled nearly 2.8 million square feet at the end of the third quarter.
New construction, as a result of the recession, has significantly declined across all product types but is starting to regain momentum as the market begins to recover and demand for space returns.
Building of speculative industrial product was in full swing in the third quarter, but speculative construction of office buildings had yet to begin. Current construction occurring in the office sector is all build-to-suits. Today, there is about 71% less space under development than there was at the end of 2006. Construction, although at lower levels, was up considerably from 12 months earlier, when there was 490,000 square feet under construction in the county.
There were four build-to-suit projects under construction in Orange County’s office sector totaling nearly 1.3 million square feet. Hyundai Motor America Inc. was building its 469,000-square-foot facility in Fountain Valley; it was recently completed. Construction continued on Pacific Investment Management Co.’s 380,000-square-foot headquarters in Newport Beach. There had been approximately 250,000 square feet of office construction completed to that point in 2013, including the 107,000-square-foot build-to-suit for the Carpenters Union.
Construction of retail space in Orange County remained minimal, but one new center continued in the construction phase. The nearly 481,000-square-foot regional center named The Source broke ground at the end of 2012 in Buena Park.
Some development had occurred in the small-center and single-tenant arena of less than 50,000 square feet, but The Source represents the first center built since the fourth quarter of 2008.
Renovations and expansions designed to enhance and improve existing centers were occurring in the market, although no new centers have been added to Orange County’s retail inventory in four years. Other formerly active development projects remained on hold or have been frozen indefinitely.
Construction on Pacific City, a 191,000-square-foot center specialty center in Huntington Beach, halted in early 2010. There was minor work occurring at the center in the third quarter, but full-blown construction hadn’t restarted.
The industrial sector experienced the most construction activity, increasing significantly from just one year earlier. The first two phases of the Anaheim Concourse Distribution Center broke ground in 2013 and are expected to be completed in the middle of this year.
A 97,000-square-foot build-to-suit in North Orange County for RPM Trucking was delivered in the third quarter, bringing the sector’s under-construction activity to more than 1 million square feet. That’s the biggest amount of construction activity the market has had since the first quarter of 2006. Phase 3 of Anaheim Concourse, planned to be 807,530 square feet, is slated to break ground this summer.
Research and analysis provided by CBRE Research.
