In response to the economic uncertainty facing the nation, construction has significantly declined.
At the end of the third quarter, commercial property under construction in Orange County totaled less than 500,000 square feet. The decline can be seen in all building types across the board. In particular, it can be seen in the office sector, which has seen a significant slowdown with only one building in the construction phase, totaling 82,042 square feet.
The construction of office space hit its peak in late 2006, when developers saw the record low vacancy levels and high demand. Today, there is about 98% less space under development than there was at the end of 2006. Following the delivery of 1.4 million square feet of new office space in 2008 and one 90,000-square-foot building year-to-date, the current office space under construction now is less than 100,000 square feet. Although there are many office projects in the planning phase, none are expected to break ground in the remainder of 2009 nor early 2010.
Development of retail centers also declined with 191,000 square feet under construction, none of which broke ground last year. Because many developers have put plans on hold, construction in OC has come to a halt. Marblehead, a 600,000-square-foot specialty center in San Clemente, continues to be on hold.
Industrial development continues to remain low, mainly due to a lack of available land, which is leading builders to redevelop existing structures.
North County carries the largest amount of new construction, totaling more than 120,000 square feet. The Canyon Point Center in Anaheim has a total of three buildings that broke ground in the third quarter and is due to be complete in mid 2010. In the greater airport area, there is one building in Fountain Valley under construction that totals slightly more than 52,000 square feet.
Data and analysis by CB Richard Ellis Group Inc.
