Q2 2012 Orange County, California Retail Property Sales Analysis

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Q2 2012 Orange County, California Retail Property Sales Analysis

Metro Volume and Pricing

Investment in retail real estate property remains slow. Only one transaction, the largest in a year, closed during the second quarter of 2012 as Property OC 101 LLC paid Saab CA LLC $12.1 million ($216 psf) for the 55,900-square-foot Burlington Coat Factory @ Bristol & Segerstrom Plaza property in Santa Ana. The deal closed in June at an 11.2% cap rate. No properties sold the quarter before. Only nine sales, for a combined total of $49 million ($200 psf), completed all told in 2011. *

Top Submarkets

With only five sales closing over the past four quarters, the Central submarket led with 70,941 square feet changing hands for a combined total of $18 million. Only two other submarkets saw completed sales transactions: 19,713 square feet sold in the West for $4 million, while 15,200 traded in the South for $4 million. Average prices were high, ranging from $213 psf in the West to $247 psf in the Central submarket.

Cap Rate Comparisons and Forecasts

With so few sales, “average” cap rate data per quarter often reflect only a single deal. The 12-month rolling cap rate, which also includes only small numbers of deals, has fluctuated within the range of 6.5% and 8.0%, roundly stated, for the past two years. The 12-month rate per the latest quarter was 7.7%, up from 6.4% the quarter before and from 7.1% as of second quarter 2011. The 12-month rolling rates per the latest quarter for retail property sales in the West and U.S. both were 7.8%, down 10 basis points each from the quarter before.