To date the Orange County retail market has expanded to more than 69 million square feet of leasable shop space. At the end of the fourth quarter, the retail vacancy rate declined, lease rates stabilized, the county experienced another quarter of healthy net absorption, and 2 million square feet of retail construction was under way. During the fourth quarter, the retail vacancy rate decreased to 7.83% from 7.98% at the end of the third quarter. Average asking net lease rates for retail space in Orange County decreased 1 cent to $1.50 per square foot per month. Approximately 230,000 square feet of positive net absorption were experienced, maintaining the positive net absorption trend from the third quarter. Attesting to the confidence in the market, Orange County continued to build new centers. Another two centers broke ground (one neighborhood center and one community center) on over a half-million square feet of new construction, to close the quarter and year.
Vacancy Rates
As the year came to a close, vacancy rates in Orange County continued to drop. The fourth quarter retail vacancy rate declined 2% from the third quarter, to 7.83%. The vacancy rate has decreased 8% since the fourth quarter of 1998. Paced by a low of 6.86% in South Orange County, vacancy rates in all five sub-markets were in single digits.
Net Absorption
Just over 60% of the county’s 581,804 square feet of retail net absorption in 1999 was experienced in South County. Another 30% was experienced by Central OC. For the quarter, OC produced positive net absorption of 229,788 square feet. Annual net absorption was strongest in community centers and power centers, particularly in South County.
Lease Rates
Average asking lease rates for the retail market have remained relatively consistent over the past 12 months. For the quarter, the overall average asking lease rate decreased 1 cent (0.7%) to $1.50 per square foot per month. Among the five sub-markets, average asking monthly lease rates for shop space ranged from a high of $1.97 per square foot in Central Coast to a low of $1.30 per square foot in North County.
Construction
Retail space under construction increased by approximately 24% in the fourth quarter, to 2.0 million square feet. Construction was up 50% from the fourth quarter of 1998, when 1.3 million square feet were under way. During the quarter, one neighborhood center added 150,000 square feet to the base in Central Coast. Two new centers (one neighborhood center in North County and one community center in South County) broke ground in the fourth quarter and will add another 530,435 square feet of retail space this year.
