The retail market outlook continues to improve.
January marked the eighth consecutive month of increasing retail sales figures.
The likely explanation is that consumers seem to feel more secure in their jobs and are beginning to spend again. Retailers are also getting back into expansion mode as they experience these sales increases at the cash registers.
The past saw vacant space in Orange County go to a small sampling of tenants for the past year. Grocery stores, discounters, fitness centers, and restaurants found themselves as the beneficiaries of high-quality space being available for the first time in a decade. Some tenants sought to make the most of the new opportunities and lower lease rates, but others sat on the sidelines waiting to see signs of recovery before opening new stores.
A number of notable deals were signed during the latter part of 2011.
Leases
Cinopolis Luxury Cinemas, a high-end movie theater chain out of Mexico with a full restaurant and bar component, signed leases in Laguna Niguel and Rancho Santa Margarita. Dick’s Sporting Goods leased 47,948 square feet on Edinger Avenue in Huntington Beach, and Buy Buy Baby—a new baby concept from Bed Bath & Beyond—purchased a building in Mission Viejo.
Newly active tenants are beginning to tour the market looking for new sites, including Orchard Supply, Shoe Carnival and Hobby Lobby.
Q4 Vacancy Rate
Vacancy in the fourth quarter of 2011 rose to 5.6% versus 5.1% in the previous quarter, and the average asking rent fell again to $2.35 per square foot from $2.39 per square foot in the previous quarter.
Ultimately higher retail sales numbers will mean more tenants looking to expand, which will create competition on empty space driving vacancy lower and asking rates higher.
Pagel is a senior vice president in the Newport Beach office of CBRE Group Inc.
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