The Orange County retail market once again saw increases in overall market fundamentals, with minor improvements throughout multiple sectors.
Changes weren’t very dramatic—the market remained stable, carrying over similar trends and momentum from the second quarter.
Demand, Vacancy
Demand remained steady for quality property as active tenants continued to seek class A space in all five major submarkets. Multiple retail tenants continued to look toward expansions, with numerous minor development projects both under way and proposed throughout the region.
Orange County, as a highly desirable market with great demand for prime space, maintains one of the lowest vacancy rates in Southern California. Vacancy continued to be pushed down, dropping from 4.6% to 4.4%. That is largely attributed to four of the submarkets recording decreases. Orange County has had only gradual changes in vacancy since the Great Recession, though the region has continued to trend positive, with future projections showing continued decreases.
The third-quarter brought the first positive net absorption this year, generating a positive 157,012 square feet of space and bringing the county into the positive for year-to-date absorption with 61,286 square feet.
Most activity was in the North OC submarket, with an overall impact of 105,312 square feet. All five major center types reported positive absorption, the largest being neighborhood centers, with 120,693 square feet.
Several development projects continue to get under way in the region, with proposed retail also up for OC.
Development
Development on Pacific City in Huntington Beach, for instance, drew close to completion, with a projected delivery date of late this year.
Construction continued on The Source at Beach in Buena Park, with a slated delivery date of early 2016.
Some of the largest projects in the development pipeline include the 300,000-square-foot Westgate Plaza center in Anaheim, a 250,000-square-foot neighborhood center in Yorba Linda, and the 230,000-square-foot second phase of the Outlets of San Clemente.
Hill is a senior analyst at CBRE.
