Real Estate Watch: Retail
More Stores Planned, Shoppers Holding Up
By MARK SMITH
The Orange County retail market could be described as “holding up well.”
While retail remains the best-performing sector,compared to the industrial and office markets,recent retail results only are slightly positive.
Employment and consumption drives retail spending and the demand for retail space. Though consumer confidence is low, other income sources such as residential refinancing and home equity lines have provided fuel for spending, particularly for furniture and home improvement goods.
Of course, once the house is finished, spending continues in other sectors. New furniture and accessories require concurrent personal item buys.
Compared to the rest of the country, OC’s retail environment, while below previous record years, remains healthy.
This is reflected in lower first-quarter retail vacancy rates and a slight rise in lease rates versus a year ago. But total retail sales are expected to rise this year. A growing county population and total income is good news for retailers and retail developers.
The first quarter saw a modest 51,000 square feet of new construction.
But the ongoing 2.1 million square feet is the real news. These projects are being built across the county.
Two other major real estate events in OC involve the two Irvines,the city of Irvine and The Irvine Company.
The city plans to annex some 4,700 acres of the former El Toro Marine base that the federal government plans to sell in just four parcels to developers.
Of the total acreage, 800 will go to residential, industrial and retail development with these parcels expected to support the remaining acres forever on property taxes. Assessments aren’t expected to exceed 2% of the property value.
To paraphrase Winston Churchill “Never have so few (acres) been expected to supply so much for so many.”
At the Irvine Co., retail development is brisk with the recent completion of Crystal Cove and the third phase of the Irvine Spectrum.
New projects slated are The Bluffs in Newport Beach and a center in Shady Canyon just off the San Diego (I-405) Freeway at the Sand Canyon/Shady Canyon off-ramp.
Tapping into the home improvement trend, the Irvine Co.’s Irvine Spectrum Pavilions recently added a 50,000-square-foot Bassett Furniture Direct flagship store to its lineup, which includes the Great Indoors and Treasures.
Smith is an associate on the Cyr/Smith team in the Anaheim retail hub office of CB Richard Ellis Inc.
