— By John Read of CBRE Retail Investment Properties-West —
Orange County is often defined by its 42 miles of Pacific coastline, its globally recognized theme parks like Disneyland and Knott’s Berry Farm, and retail landmarks like South Coast Plaza and Fashion Island. Those assets contribute to the region’s visibility and appeal. But they are not what ultimately sustain its retail performance.
The county’s strength is rooted in its scale and demographics. Encompassing nearly 800 square miles, Orange County is home to more than 3.1 million residents and one of the most diverse populations in the U.S., including the second-highest share of foreign-born residents in Southern California. The county’s strong retail fundamentals are supported by significant affluence and education. Average household income exceeds $157,000, and 46 percent of residents hold a bachelor’s degree or higher.
Orange County is also home to major employers, including Disney, UC Irvine, Providence, Kaiser Permanente and Hoag, maintaining a low unemployment rate of 3.9 percent. These factors collectively make Orange County’s retail property fundamentals undeniable.
The Orange County retail market ended the fourth quarter with a countywide availability rate of 3.9 percent, down 10 basis points from the previous quarter. Several submarkets were even tighter. This includes Central Coast at 1.8 percent, Central at 3.5 percent and West County at 3.4 percent. With limited land available and a population that represents 8 percent of California’s residents but only 0.5 percent of its land area, new retail development remains extremely constrained, which keeps availability low in the near term.
Net absorption improved to 176,000 square feet in the fourth quarter, representing an increase of more than 550,000 square feet over the past two quarters. Much of the momentum came from tenants stepping into space vacated during the wave of retailer bankruptcies earlier in 2025.
The combination of significant retail demand, strong rents ($2.20 per square foot to $4.06 per square foot, depending on submarket), limited development land and elevated construction costs has compelled investors to continue pursuing existing retail property purchases here. Many are trading at a pricing premium compared to other markets. MSCI cites a 5.8 percent average cap rate for Orange County, 6.3 percent for the West and 7 percent nationally.
Capital markets volatility remained in 2025, caused by “Liberation Day” concern in the spring and persistent higher interest rates that left the 10-year Treasury yield fluctuating between the low and high 4 percent range. Even with that backdrop, Orange County retail sales volume finished higher in 2025 than the prior year, supported by exceptionally strong pricing from diverse capital sources.
Continuing its consistent and historical trend, 70 percent of purchases were private investors. This was in line with our CBRE Retail Investment Properties-West team’s significant activity within the private capital segment. Seven of the eight Orange County retail sales our team completed in 2025 involved private investors, and two more have closed with private buyers thus far in 2026.
Recent transactions illustrate where capital is concentrating. In April 2025, Foothill Plaza in Foothill Ranch traded for $9.35 million at a 5.68 percent cap rate. In May 2025, the leasehold interest in Westport Plaza & Square in Costa Mesa sold for $25.7 million to Asana Partners. Asana has continued its pursuit of Orange County retail assets with its January 2026 acquisition of Gateway Center in Mission Viejo for $51 million and February 2026 acquisition of Seacliff Village in Huntington Beach for $151 million.
Other notable recent transactions include the December 2025 sale of Plaza Pacifica Center in San Clemente for $21 million to Investment Concepts and the June 2025 sale of Fullerton Metrocenter for $118.5 million to Space Investment Partners.
As 2025 progressed, easing tariff-related uncertainty, Federal Reserve rate cuts with the potential for additional adjustments and the passage of the One Big Beautiful Bill Act contributed to renewed investor engagement and improving transaction momentum. That shift is expected to carry into 2026.
Orange County’s retail market continues to distinguish itself through consistently strong fundamentals and its ability to attract both retailers and investors at pricing that outpaces many competing markets. The premium it commands reflects durable demand and long-term confidence rather than short-term enthusiasm.
— By John Read, Senior Vice President, CBRE Retail Investment Properties-West. This article was originally published in the February 2026 issue of Western Real Estate Business.