It’s hard to find an empty store in Orange County.
The county’s retail vacancy rate fell to 4 percent this summer, the lowest since 2007, the Orange County Business Journal reported, citing figures from CoStar Group.
The low storefront vacancies point to a retail squeeze caused by millions of square feet of demolished stores and the lack of new retail development.
The redevelopment of OC shopping centers may provide new slots for boutique tenants, but shrink overall retail availability. That could tighten the crunch and send vacancy rates even lower.
Some 4 million square feet of retail space in OC was demolished over the past year in a market once considered “over-retailed,” with many of the stores replaced by homes, according to the Business Journal.
The dwindling supply of available shops is causing a real estate rush, with prospective OC companies running out of expansion options.
Meanwhile, high-end shopping centers are fully leased, as development opportunities shrink.
There’s only one major retail project in the OC pipeline. The River Street Marketplace, a 60,000-square-foot center under construction in San Juan Capistrano, has 22 pre-leased tenants.
Meanwhile, growing consumer demand for suburban markets has sent companies from fast-food to high-end restaurants scrambling to set up shop in the OC, with high demand for grocery space.
“Tenants are hanging in and landlords are raising rents,” JLL’s Orange County Vice President Justin McMahon told the Business Journal. “The very best space is going to have multiple offers on it every time.”
OC has 144 million square feet of retail shops, with rents averaging $2.65 per square foot, according to CoStar. The Business Journal didn’t include data for retail markets such as Los Angeles.
— Dana Bartholomew
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