The Orange County retail market slowed slightly in the second quarter, but there was continued positive net absorption going into the third quarter totaling 345 square feet.
It marked the fourth consecutive quarter in which the region has seen positive net absorption and brought the year-to-date total to 54,256 square feet.
Contributors
The biggest contributors to the absorption were community centers, which totaled 38,214 square feet for the quarter. Power centers followed with a positive 3,200 square feet, and strip centers were next, ending the quarter with absorption of 3,057 square feet. Specialty centers had 791 square feet of positive net absorption.
Neighborhood centers were the only center type to end the quarter with negative absorption, recording 791 square feet.
The county’s vacancy rate remained the same, ending the quarter at 4.9%. That marked the third straight quarter in which the vacancy rate has stood just below 5%.
The retail sector continues to see steady leasing activity overall, predominantly in the restaurant, food hall, and service-based categories. Food hall concepts such as the OC Mix, the Packing House in Anaheim, and the Union Market in Tustin and Mission Viejo have experienced strong activity combining locally grown and made foods and goods. Service-based tenants such as daycares, wellness centers, and gyms have also experienced consistent growth.
Minor developments and construction continue throughout Orange County. Walgreens began construction in February on a new location in Costa Mesa that’s scheduled to open in October.
Fashion Island welcomed Cucina Enoteca at the end of the quarter, and a 25,000-square-foot BuyBuyBaby project is scheduled to begin construction in Yorba Linda, with a projected finish sometime next year.
The Source
Retail development as a whole continued to experience slow growth. Construction on The Source regional center in Buena Park continued, with a scheduled opening this fall. The center will include shopping, dining, entertainment and space for multifamily use.
The market continued to benefit from measured development as tenant demand continued to absorb existing availability. The outlook remains optimistic as the market continued to make positive strides toward full prerecession levels.
Data and analysis provided by CBRE Research
