South Orange County has been one of Southern California’s strongest retail markets from the late ’90s to the present. Despite the uncertainty in the marketplace today (i.e., an unpredictable stock market, escalating energy costs and national retailer earnings that are below last year’s levels), South Orange County continues as if nothing has changed. Residential housing growth, consumer confidence levels and consumer spending are three important factors that drive retail growth and retailer success. South Orange County appears to score high marks in all three areas.
Orange County’s residential growth continues to be centered in South Orange County. Two new large masterplanned communities are under construction there. Talega, in San Clemente, is planned to total more than 3,500 homes at build-out, ranging in price from $300,000 to $900,000. More than 1,000 units already have been sold. Ladera Ranch, north of San Juan Capistrano, is planning approximately 8,100 new homes and is on pace with build-out projections. More than 1,600 homes have been sold ranging in price from $200,000 to $800,000.
Consumer confidence and consumer spending have fueled residential growth in South Orange County. Statistically, the national consumer confidence index jumped to 115.5 in May as consumers exhibited more optimism about the economy over the next six months.
Consumer spending is also up,even slightly outpricing gains in personal income. In addition, Bank of America Industry Research reports that recently 25% of respondents nationally anticipate their incomes to increase over the next six months. Although these numbers do not exist on a micro basis for South Orange County, it is evident that those figures would be substantially higher.
Not surprisingly, the retail growth has continued to be strong in South Orange County and follows in the path of the residential growth. Of Orange County’s seven shopping centers larger than 50,000 square feet under construction, five are in South Orange County, totaling more than 950,000 square feet.
Kohl’s, a department store chain based in the Midwest, plans to open 35 locations in Southern California in 2003. The first deal signed in California has already been signed in Rancho Santa Margarita and calls for a 90,000-square-foot store. In addition, the 300,000-square-foot Santa Margarita Marketplace opened in late 2000 with Lowe’s Home Improvement, Marhsall’s, Linens ‘N’ Things, Staples, Pier 1 Imports and others.
In San Clemente, the Talega residential project has helped fuel the demand for the 450,000-square-foot Plaza Pacifica retail project anchored by Wal-Mart, Lowe’s and Albertson’s. Ladera Ranch has opened a neighborhood shopping center anchored by Albertson’s and Sav-On Drugs and is preparing for construction of a second retail project to accommodate more regional retail demand.
The bottom line is that if we are going into an economic slowdown or a real estate downturn, no one has gotten the message yet in South Orange County.
Moore is a senior vice president with CB Richard Ellis-Retail Services in the Anaheim office.
