Orange County’s commercial real estate market is starting to stabilize.
The overall vacancy rate for retail space held at 5.8% in the first quarter. Positive net absorption in the West, South and North county submarkets were countered by negative absorption in the Central and Central Coast submarkets, where the losses came mainly in neighborhood and community centers.
The Source
Construction of retail space in the county remains minimal, although one major project is under way: a nearly 481,000-square-foot regional center named The Source in Buena Park. Some development has occurred in the small center and single-tenant buildings of less than 50,000 square feet, but The Source is the first center to break ground since the fourth quarter of 2008. Renovations and expansions of existing centers are occurring, 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. Construction on the 191,000-square-foot Pacific City, a specialty center in Huntington Beach, halted in early 2010. Minor work is occurring at the center, but full-blown construction hasn’t gained momentum.
The average asking lease rate for retail space increased by 8 cents to $2.27 per square foot, the first significant increase since a steady decline started in 2009. The Central Coast submarket is tracking the widest range of average asking lease rates, from a low of $1.10 per square foot to a high of $6 per square foot, resulting in an average asking rent of $3.31 per square foot.
The Central Coast submarket ended the quarter with the highest average asking lease rate among the five major submarkets, at $3.31 per square foot. The Central submarket posted the lowest average asking lease rate, at $1.87 per square foot. The West, North and South submarkets had average asking lease rates of $2.04, $2.13 and $2.49, respectively.
Asking rental rates have declined on average year-over-year by about 4.5% since the first quarter of 2010.
Analysis provided by CBRE Research.
