Retail Market Surges With Vacancy, Rates, Absorption Gaining
Orange County’s strong retail market last year continued into the first quarter, with the sector seeing positive absorption of more than 447,000 square feet, vacancy rates falling to a historically low 4.7% and average asking lease rates moving up to $2.03.
A big factor that’s contributed to the resilient retail market: large tax refunds, which are propping up spending on personal items and home improvements.
Vacancy Rates
Retailers’ continued expansion combined with less shop space opening up in Orange County resulted in a decline in the county’s vacancy rate to 4.7%,the lowest level in decades.
Specialty centers posted the most promising gains in occupied space as high-end boutique shops snapped up prime locations at entertainment destinations.
West County maintained the lowest vacancy rate at 1.5%, a result of zero completed construction projects in the area.
Net Absorption
Reflecting a steady comeback, the Orange County retail market surged with positive net absorption of more than 447,000 square feet in the first quarter.
Shop space in South County and Central Coast far outpaced other areas; neighborhood and specialty centers gained the most tenants. Overall leasing activity was at a brisk pace in the first quarter. North County was the only straggler that had negative absorption.
Lease Rates
Strong demand and tight supply have pushed lease rates up by more than 7% in the past quarter to $2.03.
All areas saw a jump in average asking lease rates except West County, which posted a slight drop to $1.46.
Landlords are commanding a higher price on the limited supply of shop space available as more retailers tap into the county’s affluent household incomes.
Construction
Four new centers completed construction in South County and the Central Coast during the first quarter, adding more than 700,000 square feet of gross leaseable area to the market.
Opening in the Ladera Ranch area were Mercantile East, a 275,000-square-foot community center anchored by Kohl’s and Chick’s; Mercantile West, a 156,000-square-foot neighborhood center anchored by Pavilion’s; and Bridgepark Plaza, a 102,000-square-foot neighborhood center anchored by Albertson’s.
Irvine Spectrum Center finished construction on phase four, adding more than 169,000 square feet.
Quail Hill Village, a 150,000-square-foot center in Irvine, is the county’s only retail in the final phase of construction and set for a second-quarter opening.
Analysis provided by CB Richard Ellis Inc.’s Information Management Department.
