Real Estate Watch: Construction
Retail Leads Tepid Construction Activity
Industrial Construction
After several years of strong development activity, industrial construction fell by nearly 50% in the second quarter.
Fifteen industrial buildings with 623,000 square feet were completed, with just five buildings breaking ground; about 586,000 square feet was under construction at the end of the second quarter. More than half of the finished space was research and development, including a 270,000-square-foot building in Anaheim and six new buildings in San Clemente.
About 44% of completed construction was manufacturing and warehouse space, split between North and South County.
Work on four manufacturing and warehouse buildings with 145,000 square feet in the Fullerton Business Park was started in the quarter, as well as a 27,000-square-foot research and development building in Irvine’s Spectrum 5.
Office Construction
Office construction of 1.4 million square feet was being built at the end of the second quarter, less than half the activity seen a year ago. Two low-rise buildings with 200,000 square feet were finished in the quarter.
One three-building project broke ground in Central County: the Arena Corporate Offices were 63% pre-leased when construction started in June. Completion is set for the second quarter next year.
Retail Construction
With little space to build on and increasing land prices, retail construction activity remained relatively flat as it has for the past four quarters.
Although no new centers broke ground in the second quarter, 3.6 million square feet of construction was under way at the end of the quarter. Most retail construction is in the North and South County regions.
Activity includes five specialty centers, five community centers, one power center and a neighborhood center.
Plaza El Paseo, a 150,000-square-foot power center in Rancho Santa Margarita, was the only mall finished in the quarter,the first completed since the second quarter last year. El Paseo is 100% leased and has a Kohl’s, Bed Bath & Beyond and Borders.
Analysis provided by CB Richard Ellis’ Global Research and Consulting.
