Commercial property under construction in Orange County at the end of the fourth quarter totaled nearly 2.8 million square feet.
Construction had significantly declined across all product types during the recession. But, as the market starts to recover and demand for space returns, construction is starting to regain momentum.
Construction of speculative industrial space was in full swing in the fourth quarter, but speculative construction of office buildings hadn’t begun. The current construction occurring in the office sector is all build-to-suits.
There’s currently about 71% less space under development than there was before the recession.
There are now four build-to-suit office projects under construction in Orange County totaling nearly 1.3 million square feet. Approximately 250,000 square feet of office construction was completed last year, including the 107,000-square-foot build-to-suit for the Carpenters Union.
Construction of retail space remained minimal. Just one, a regional center named The Source in Buena Park, is under way.
Some development has occurred in the small-center and single-tenant arena of less than 50,000 square feet, but The Source is the first center to be built since the fourth quarter of 2008.
Two free-standing buildings broke ground in the third quarter and remained under construction, bringing the total for OC to 710,208 square feet. Renovations and expansions designed to enhance and improve existing centers are occurring, though no new centers have been added to Orange County’s retail inventory in four years. Other formerly active development projects remain on hold or have been frozen indefinitely.
The industrial sector is experiencing the most construction activity, increasing significantly from just one year ago. The first and second phases of the Anaheim Concourse Distribution Center are expected to be completed midyear. The third phase, planned to be 807,530 square feet, is slated to break ground in the summer.
A total of 587,866 square feet, consisting of four manufacturing and warehouse buildings, was added to the market’s inventory last year. There are many projects in the pipeline, and with the tight supply of industrial space, development should continue to be active this year.
Research and analysis provided by CBRE Research
