Orange County, CA Retail Market Report Q2 2026

Orange County’s retail vacancy ended the quarter at 3.8%, reflecting limited availability across many established trade areas. Net absorption totaled 433,000 square feet, well above the 7,400 square feet delivered during the period. Asking rents averaged $39.51 per square foot, while annual rent growth measured 0.6%. The modest pace of growth suggests tenants remained cost-conscious despite tight availability. Grocery-anchored centers, neighborhood retail, and high-traffic coastal locations continued to attract demand. Older or less-visible properties faced greater pressure to offer concessions or tenant improvements. Overall, positive absorption and low vacancy continued to support stable operating conditions.

Key Findings

• Retail fundamentals remained strong, supported by low vacancy, positive absorption, and limited new supply.
• Rent growth was modest, but competition for well-located space continued to support asking rates.
• Investment activity remained selective as higher financing costs influenced pricing and buyer underwriting.

OC Retail Supply & Demand Dynamics

Source: CoStar Group, Inc.

Orange County Demographics

Source: Oxford Economics

• Unemployment Rate: 4.4%
• Current Population:3,147,179
• Households: 1,096,794
• Median Household Income: $119,860

Orange County remains one of Southern California’s most desirable retail markets, supported by its affluent consumer base, strong household incomes, dense population, and steady tourism activity. Limited vacancy and constrained new development continue to support demand for well-located space, particularly in grocery-anchored centers, neighborhood retail, and high-traffic coastal trade areas. Looking ahead, low levels of new supply and positive absorption should help preserve market stability, although rent growth may remain moderate as tenants remain selective on occupancy costs.

Population, Labor Force, & Income Growth

Source: CoStar Group, Inc.

Orange County Retail Construction

Approximately 313,000 square feet of retail space was under construction at quarter-end. Only 7,400 square feet was delivered during the quarter, adding little competitive pressure to existing properties. High land values, entitlement challenges, and elevated construction costs continued to limit development. Most new projects remained concentrated in mixed-use developments, redevelopments, or build-to-suit opportunities. With absorption significantly exceeding deliveries, demand continued to outpace new supply. The restrained pipeline should support occupancy and rent levels over the near term.

SF Construction Starts

Source: CoStar Group, Inc.

SF Under Construction

Source: CoStar Group, Inc.

 

Orange County Retail Sales

Retail sales volume totaled $348 million during the second quarter. Properties traded at an average price of $441 per square foot and an average cap rate of 5.5%. Pricing continued to reflect Orange County’s strong demographics, limited supply, and high barriers to entry. Buyers remained selective as elevated financing costs affected leverage and return requirements. Grocery-anchored centers, necessity-based retail, and assets with strong tenant credit drew the most interest. Properties with rollover risk or capital needs faced more conservative underwriting. Investment activity may remain uneven, but well-located assets should continue to attract capital.

Orange County Retail Sales Volume

Source: CoStar Group, Inc.

By the Numbers

Q2 2026 | Source: CoStar Group, Inc.

• Sales Volume: $348M
• Price Per SF: $441
• Cap Rate: 5.5%
• Vacancy Rate:3.8%
• Rent Growth: 0.6%
• Asking Rent Per SF: $39.51
• SF Under Construction: 313K
• SF Delivered: 7.4K
• SF Absorbed: 433K