At the end of the second quarter, commercial space under construction totaled 5.3 million square feet. Making up approximately 64% of projects under construction is 3.4 million square feet of office space. Shopping center development consists of 1.6 million square feet while construction of industrial buildings has slowed, with 305,240 square feet being built.
Low vacancy levels and high demand recorded in the latter part of 2005 and into early 2006 led developers to begin construction of office buildings. There was more than 1.3 million square feet of construction completed in the second quarter, with 57% of the space pre-committed at completion.
In addition to first quarter’s 416,856 square feet of space completed, the year-to-date total now is 1.8 million square feet of new office space. The remaining pipeline of office space for the year is 2.7 million square feet. About 32% of that space is pre-leased, with an additional 506,000 square feet expected to be completed in early to mid 2008.
The retail sector, which also has extremely low vacancy levels, has seven centers that are under construction. One of the most notable projects to complete construction this quarter is The District in Tustin, which is a redevelopment of the former Tustin Marine base. This project will be home to 1.1 million square feet of retail space and will also have office, industrial and housing mixed in.
The Anaheim GardenWalk project, which broke ground in the third quarter of 2006, remains under construction and will add approximately 439,600 square feet by the end of this year.
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 Fullerton.
The Valencia Business Center has more than 118,000 square feet of buildings over 10,000 square feet under construction. Those are set to be finished by the end of the year or early 2008. Pacific Gateway Business Park in Huntington Beach, a 626,000 square foot park consisting of seven buildings, finished the last 204,000 square feet of its project in the second quarter. North Anaheim Industrial Park completed two buildings in the second quarter, and still has an additional 70,898 square feet under development.
Analysis provided by CB Richard Ellis Group Inc.’s Global Research and Consulting.
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