New commercial construction significantly declined across all product types during the recent recession, but as the market begins to recover and demand for space returns, construction is starting to regain momentum.
Commercial property being built in Orange County at the end of the second quarter totaled nearly 2.9 million square feet. Building of speculative industrial product was in full swing, though speculative construction of office buildings had yet to begin.
The current construction in the office sector is all build-to-suits. There was about 71% less space under development than at the end of 2006. Construction, though at lower levels, is up considerably from 12 months ago, when there were just 490,000 square feet under construction in the county.
There were five build-to-suit projects under construction in the office sector totaling nearly 1.3 million square feet. Hyundai Motor Amer-ica Inc. is building its 469,000-square-foot facility in Fountain Valley, and construction continues on Pacific Investment Management Co.’s 380,000-square-foot headquarters in Newport Beach. The carpenters union is building a 107,000-square-foot facility in Buena Park that’s scheduled to be completed this quarter.
Construction of retail space minimal, but one center continues in the construction phase. A 460,00-square-foot regional center named The Source broke ground at the end of 2012 in Buena Park. 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. Renovations and expansions designed to enhance and improve existing centers are occurring in the market, although no new centers have been added to the county’s retail inventory in four years.
Other formerly active development projects remain on hold or have been frozen indefinitely. Pacific City, a specialty center in Huntington Beach, halted construction of the 191,000-square-foot center in early 2010. There is minor work occurring at the center, but full-blown construction has yet to restart.
The industrial sector experienced the most construction activity, increasing significantly from just one year earlier. The first two phases of the Anaheim Concourse Distribution Center, which will be a combined 864,794 square feet, broke ground this year and are expected to be completed in mid-2014.
A build-to-suit in North Orange County and RPM Trucking remain under construction, and a 83,078-square-foot manufacturing and warehouse building in Brea and a 198,000-square-foot build-to-suit for CVS completed construction this quarter. That brings the industrial sector’s under-construction activity to nearly 1.2 million square feet, the largest amount the submarket has seen since the first quarter of 2006. The second phase of Anaheim Concourse, planned to be 807,530 square feet, is slated to break ground next summer.
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