July 8, 2016
Have you signed up to attend Connect Orange County? Here’s where to register for the event slated for July 28th.
CBRE research reveals that strong employment and low vacancy helped drive Orange County’s retail sector in Q2 2016. The market has continued its steady and gradual pace over the last few quarters, retaining stability with secure fundamentals and an overall positive outlook. Orange County’s vacancy rate is projected to remain within the 3 percent range over the next 12 months, with steady demand and leasing activity projected to continue, according to CBRE EA.
Q2 Highlights include:
HOUR GLASS ECONOMY: Shifting demographics nationally are reflected in the Orange County retail market. Primarily, the middle class is shrinking, while the upper middle and lower income sectors are expanding. That’s reduced demand for retailers. The market is continuing to see middle-tiered box tenants depart as a result of over saturation and weak sales. Discount and luxury sector tenants continue to thrive. That is evident by success across a spectrum of categories from restaurants to athletic apparel and grocers.
VACANCY COMPRESSION: Job growth, geographic appeal, and new space delivered into the market have helped drive the region. Although changes in vacancy have remained gradual over the last 4 years, retail vacancy has continued to trend in a downward trajectory, decreasing in rate as space continues to be leased. Vacancy is anticipated to decrease further throughout the year due to grocery box vacancies filling and new pre-leased space delivered into the market.
PROPOSED DEVELOPMENT: Development activity has been modest for Orange County’s retail market. Developers have been cautiously optimistic about the region’s future health and have proceeded carefully moving forward on projects. Orange County currently has 1.8 million square feet of retail space in the proposed development pipeline. Growing populations and strengthening incomes have created demand for additional retail in Orange County with emphasis on projects that specifically create an experience, while offering a service.