According to gross domestic product figures released by the government, the recession officially ended in the third quarter.
But state and national unemployment continues to rise and there still are many challenges facing the real estate market and the retail segment in particular.
There is a lot riding on the 2009 holiday season. There seems to be an uptick in consumer confidence, despite the poor job market.
On one side, there are a number of reasons for optimism: an improved housing market, continued low interest rates, extension of the federal housing credit, the stock market’s recovery, Small Business Administration loan activity and a stabilized auto industry. These are important to the shop leasing market.
On the other side, the jury still is out on holiday sales, unemployment in Orange County is 9.4% and the capital markets remain challenging.
But that doesn’t mean retailers aren’t looking at space in OC.
Retailers look favorably on infill markets with OC’s density and affluence. In the words of one of our retailers, “We want to be near water and big buildings!”
Big boxes larger than 25,000 square feet are slowly being taken up, which helps the entire market. Minimal construction during the past year also is helping the overall retail market.
Vacancy rates have increased from 7.9% to 8.3% from the second quarter to the third. But asking lease rates have stabilized and are virtually unchanged from the second quarter.
There are retailers entering the marketplace including mid-price and family restaurants such as Bob’s Big Boy and Buffalo Wild Wings, as well as Ultimate Electronics, which generally occupies 25,000 to 30,000 square feet.
These types of retailers seem to have profited from the recession and continue to expand.
Looking to the end of 2009, fingers are crossed for a positive holiday shopping season, which would create momentum going into 2010.
Kaplan is a senior vice president in the Anaheim office of CB Richard Ellis Group Inc.
