Q2 2025 Orange County Retail Market Report

 

Highlights

• Driven by the Q4 leasing boom and early 2025 demand, Orange County’s retail sector margins are incredibly slim, at 4.1%, just 0.8% below the national average.
• Discount and experiential retailers are forging a demand-driven market for big-box retailers.
• While rents have increased by 2.9% year-over-year, following a 4% gain in 2024, rent growth has stalled throughout the sector, as demolitions have exceeded new construction over the past three years.

 

By the Numbers

• Sales Volume: $479M
• Cap Rate: 5.3%
• Market Sale Price Per SF: $446
• Vacancy Rate: 4.0%
• Rent Growth: 2.9%
• Market Asking Rent Per SF: $39.08
• SF Under Construction: 217K
• SF Absorbed: (163K)
• SF Delivered: (169K) | Q2 2025 | Source: CoStar Group

 

Demographics

• Unemployment: 3.9%
• Current Population: 3,177,806
• Households:1,110,142
• Median Household Income:$116,845

 

Market Performance

The retail sector is red-hot, consistently outperforming national benchmarks. Tenant retention is strong across the corridor, with especially low turnover rates in core trade areas.

 

North County and inland areas lead rent growth, fueled by strong demographics, competitive pricing, and growing tenant demand. Coastal submarkets face fewer new tenants due to high space costs and complex approvals.

 

With 217,000 SF underway, the region focuses on long-term stability through tenant turnover and adaptive reuse. This strategy supports a landlord-driven market with strong pricing and stable occupancy. Competitive pressure will continue supporting core fundamentals

 

Market Asking Rent Per SF and Vacancy Rate

Source: CoStar Group

 

 

Under Construction

 

 

Orange County’s construction pipeline is minimal, with just 217,000 SF, or 0.1% of total retail inventory. Current projects are small and pre-leased, including Amazon Fresh in Laguna Hills and retail at Dana Point Harbor. Additional sites include drive-thrus and single-tenant builds in Garden Grove, Costa Mesa, and Anaheim. No major speculative or big-box builds are planned, showing a cautious, demand-led strategy.

 

Sales

The Orange County retail investment market is incredibly robust, with 250 deals closed year-to-date totaling more than $1.1 billion, outpacing the annual totals of the past two years. The majority of buyer activity is driven by private capital, but in recent quarters, REITs, particularly through portfolio acquisitions of credit-backed retail assets, have also entered the market.

 

Major deals included:

 

• Terreno Realty acquired a 134,400 SF Home Depot in Santa Ana for $49.5 million at a 5.7% cap rate, secured by a long-term lease with renewal options.
• A 117,300 SF portion of Mercantile East in Rancho Santa Margarita sold for $47.2 million as part of a larger portfolio transaction.
• The 155,949 SF Fullerton MetroCenter was sold for $45.4 million, with minimal vacancy and a mix of national tenants.
• A single-tenant Target in Placentia, totaling 154,739 SF, changed hands for $38.2 million, securing one of the highest-profile big-box trades of the year.

 

Sales Volume and Market Sale Price Per SF

Source: CoStar Group

 

 

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