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Sunday, Aug 14, 2022

Retail Posts Slight Dip for Q4, Small Gain for Year

Recent vacancies at a number of big-box properties led to 54,678 square feet of negative net absorption in Orange County’s retail market in the fourth quarter.

That trimmed gains from earlier in the year, and the retail market finished 2012 with 41,248 square feet of positive net absorption for the year.

The bulk of the fourth quarter’s negative absorption was seen in the Central OC submarket, with a total of 41,774 square feet that stemmed mainly from the closure of an Albertsons store in Garden Grove.

The shutdown of a Sav-A-Lot store in Fountain Valley was the main reason why West OC saw 28,452 square feet of negative absorption.

South Orange County saw a former LA Fitness contribute to the 16,828 square feet of negative net absorption there for the quarter.

The Central Coast submarket saw positive net absorption, thanks largely to additions to the South Coast Collection specialty center in Costa Mesa. North OC also notched a gain, with 15,036 square feet of positive net absorption for the fourth quarter.

Vacancy Rate Up

The overall vacancy rate for Orange County retail space increased in the fourth quarter and now stands at 5.8%, up from 5.7% in the prior period and even with a year earlier.

The Central Coast submarket had the lowest vacancy rate, at 4.1%. That was followed by South OC (5.3%), North OC (5.5%), West OC (6%), and Central OC (7.1%).

The average asking lease rate declined by 8 cents to $2.19 per square foot in the fourth quarter. That’s down 4% from the prior quarter and 7% from a year earlier.

Construction of new retail space in OC remained minimal in the fourth quarter, when one new major center was in the construction phase in Buena Park, where a 460,000-square-foot development called The Source broke ground.

Some development has occurred in the small-center and single-tenant segments (below 50,000 square feet). Renovations and expansions also are occurring.

Other formerly active development projects remain on hold or have been frozen indefinitely. Pacific City, a 191,000-square-foot specialty center in Huntington Beach, halted construction in the beginning of 2010. New ownership is planning to move ahead with plans in the near future.

Analysis provided by CBRE Research.


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