Retail Market
Tenants still are active in Orange County’s retail market, with positive absorption and tighter vacancy rates in the third quarter.
Vacancy Rates
The retail vacancy rate in OC fell to 6.9% in the third quarter, down from 7.1% in the previous quarter.
Each of the five county regions had single-digit vacancy rates, with Central County the tightest at 5.9%.
West County fell to 7.4% in the quarter, a notable feat for the region. At 9.6%, West County had the highest rate in the county, but now has the third-lowest rate.
Net Absorption
Retail net absorption was a positive 97,925 square feet in the quarter. Most of the activity,89,525 square feet,was in neighborhood centers, led by the Central Coast and West County markets.
Specialty centers had negative net absorption of 21,455 square feet. Central and South County were both negative. Overall net absorption through the first three quarters is 367,149 square feet, more than double the year-to-date absorption a year ago.
Lease Rates
The average asking retail lease rate was up two cents to $1.80 per square foot in the quarter.
South County was the only market area with an average asking rent higher than $2. It checks in at $2.24.
The Central Coast had the second-highest rate. But as prime space is absorbed and older, less expensive space stays on the market, the weighted average rent, which started the year above $2, has fallen to $1.87.
Average asking rents in the Central, West and North County markets had quarterly variances in the 1% to 2% range.
Construction
Orange County construction continues at a fairly steady pace, with North County, South County and the Newport Coast representing the highest-growth areas.
Newport Ridge, a neighborhood center anchored by Pavilions, was finished in the quarter and added 103,000 square feet.
South County continues to host the most construction activity with a total of 1.3 million square feet under way. The activity consists of two specialty centers and one community center.
Analysis provided by CB Richard Ellis’ Global Research and Consulting.
