The Orange County retail market now encompasses approximately 71.5 million square feet of gross leasable area. The second quarter brought about the completion of three more shopping centers, adding 665,000 square feet to the existing retail base.
Vacancy Rates
Vacancy rates, which had previously been in a declining pattern over the past four quarters, inched up in the second quarter of 2000. The current vacancy rate for retail space rose to 8.09%, up from 7.51% in the first quarter of this year, primarily due to the influx of new construction. A year ago, in the second quarter of 1999, the vacancy rate for retail space was at 8.39%, almost 4% higher than this quarter’s vacancy.
Net Absorption
Shop space net absorption, also affected by the new construction, remained positive in the second quarter, although it dropped to 97,690 square feet, 37% of the absorption seen in the first quarter of this year. Community centers and specialty centers experienced the most positive activity in the Orange County retail market during the second quarter, totaling a combined absorption figure of 188,692 square feet. The Central Coast market, which is already the most densely populated retail area, has absorbed a total of 349,114 square feet in the first half of 2000. The Orange County retail market as a whole closed out the second quarter with a total of 356,208 square feet of year-to-date absorption.
Lease Rates
Asking lease rates for retail space in Orange County spiked to an average of $1.67 per square foot per month in the second quarter. Rental increases were apparent in each market area; however, North Orange County, which had the lowest average asking lease rate over the past two quarters, showed the greatest increase in the first quarter, 32 cents. This brought the average rent in North Orange County to $1.62, still below the county’s average, but comparable to surrounding markets. Central Coast, where some centers ask for more than $3.00 per square foot, ended the quarter with the highest average asking rent, $2.07.
Construction
The Orange County retail market closed out the first half by completing construction on four shopping centers. Three of those centers, two community and one neighborhood center, were finished during the second quarter of 2000, adding 665,000 square feet to the retail base. With one new neighborhood center breaking ground in the second quarter of 2000, there is a total of 2.2 million square feet of retail development under way in the Orange County retail market.
