By KIMBERLY TALLEY
The economic crisis slowed during the second quarter, signaling a possible recovery on the horizon.
But with consumer spending still falling and vacancies still increasing, the retail market continued to be a challenging environment for both retailers and landlords during the second quarter.
Vacancies in Orange County increased to 7.7% from 7.1% and the average asking lease rate fell for the third straight quarter to $2.56 per square foot from $2.61 per square foot.
The second quarter also saw tenants continuing to close underperforming locations. Retailers and restaurants such as Pier 1 Imports Inc., Blue Coral Seafood & Spirits, Rite Aid Corp., Sears Holdings Corp.’s Sears Essential and AnnTaylor Stores Corp.’s Ann Taylor Loft are just a few that recently have closed locations in the county.
Retailers targeting the budget conscious shopper continue to gain momentum with operators such as Kohl’s Corp. and Forever 21 Inc. taking over former Mervyn’s LLC locations. Fast food restaurants still are riding the budget wave of consumers choosing low-priced fast food restaurants when eating out. Irvine-based based Taco Bell Corp., part of Louisville, Ky.-based Yum Brands Inc., was ranked in the top 10 by QSR Magazine for 2008 and 2009.
On the positive side, OC remains a desirable market for tenants looking to expand or to penetrate a market that had seen a low vacancy rate in the recent past. These categories include specialty markets, Asian and Hispanic markets, fast food restaurants and discount retailers.
As we move forward and the quarter comes to an end, both tenants and landlords continue to make adjustments by being creative and optimistic about the future of the OC retail market.
Talley is a senior associate in the Anaheim office of CB Richard Ellis.
