In the third quarter, commercial property under construction in Orange County totaled more than 4.9 million square feet. Making up approximately 61% of the total new space, and certainly the most talked about, is the 3 million square feet of planned office space.
Development of retail centers remains constant with 1.6 million square feet in the works, while construction of new industrial buildings is minimal with 293,133 square feet. More than half of all new buildings is expected to be finished in 2008.
The construction of office projects hit its peak in late 2006 when developers saw record-low vacancy levels and high demand. Today, there is about 54% less space under development than there was in third quarter 2006. Following the expected delivery of 855,044 square feet of new office space in the third quarter, there is approximately 3 million square feet still in the construction phase.
The remaining fourth quarter totals are 1.7 million square feet, of which 36% is preleased, with additional 1.3 million square feet expected to be completed in 2008.
The retail sector, also exhibiting extremely low vacancy levels, has eight centers which are under construction. Although no new retail centers were completed in the third quarter, one of the most notable projects to complete construction this year was The District in Tustin,a redevelopment of the Tustin Marine base. This 1.1 million-square-foot power center is home to tenants such as AMC Theatres, Best Buy, Costco, Lowe’s and Target.
The Anaheim GardenWalk project, which broke ground in third quarter 2006, remains under construction and will add approximately 439,600 square feet by the end of this year. This center is located between Katella Avenue and Disney Way, and will provide a variety of dining choices from Bubba Gump’s to McCormick & Schmick’s Grill.
Industrial development has slowed significantly, mainly due to lack of available land which is leading developers to redevelop existing structures. North Orange County carries the largest amount of new construction, concentrated in the city of Fullerton. The Valencia Business Center has more than 118,000 square feet of buildings larger than 10,000 square feet under construction which is due to complete the end of the year or in early 2008.
Data and analysis provided by CB Richard Ellis Group Inc.
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