Orange County retail market for property owners, Q3 2026

Orange County is one of the tightest retail markets in the country. Kidder Mathews, working from CoStar data, put countywide retail vacancy at 3.3% in the third quarter of 2026, 20 basis points lower than a year earlier, with an average asking rent of $2.77 per square foot per month. Net absorption was negative 141,281 SF for the quarter but positive 307,406 SF for the year so far. Little new space is coming: 321,531 SF was under construction.

Other firms land in the same place by different measures. CBRE reported availability of 3.7% in Q2 2026, which it said matched the market's lowest recorded level, with an average net asking rent of $2.55 NNN. Lee & Associates reported 3.5% vacancy in Q2, the lowest since 2019, and Matthews reported 3.8%. Each firm tracks a different set of buildings, so the useful comparison is each source against itself over time.

South County: where owners compete harder

South County is the exception to the tight county picture. In Lee & Associates' Q2 2026 report, the submarket had 5.1% vacancy across 18.2 million SF, the highest of the five Orange County submarkets, against 1.5% in the Airport area. Asking rent averaged $2.78 per SF per month, and the submarket absorbed a net 113,344 SF in the quarter, much of it from LV Furniture Collection and Dumos Home taking 110,266 SF at Foothill Ranch Towne Centre in Lake Forest.

For an owner in Mission Viejo, Laguna Niguel, San Juan Capistrano, San Clemente or Lake Forest, that means more competing vacancies for each tenant. The spaces that lease first are the ones that show well, are priced to recent comps, and come with a clear answer on what the tenant gets: power, gas, grease, restrooms, signage and the city's permit path for their use.

Who is leasing in Orange County

• Fitness and recreation. 24 Hour Fitness leased 26,670 SF at 200 Corporate Drive in the Rancho Santa Margarita and Ladera Ranch submarket in July 2026 (Kidder Mathews). The Picklr signed three Orange County leases totaling 67,545 SF in twelve months (Lee & Associates), including a former Bed Bath & Beyond of about 27,000 SF at 22235 El Paseo in Rancho Santa Margarita (OCBJ).
• Entertainment. Lucky Strike leased 38,000 SF at The Commons in Laguna Hills in Q2 2026 (Lee & Associates).
• Off-price and home. J.Crew Factory took 5,447 SF at The Center at Rancho Niguel in Laguna Niguel (Kidder Mathews). CBRE named Burlington and LV Furniture Collection among Q2's notable occupiers.
• Restaurants. Good Boy, from Costa Mesa's Specialty Restaurants Corp., is taking the former Hendrix space at Ocean Ranch Village in Laguna Niguel, a second-generation restaurant re-tenanting (OCBJ). Creekside is opening at Sendero Marketplace at Antonio Parkway and Ortega Highway (OCBJ). Lee & Associates wrote that second-generation restaurant spaces draw strong user interest.

Where the empty space is

Most of the county's vacant space sits in a few property types. Marcus & Millichap put drug store vacancy at 8.5% and department store vacancy at 9.4% in June 2026, well above the county average. Rite Aid's closures, Walgreens' store cuts, and the bankruptcies of 99 Cents Only, Big Lots, Joann and Party City left boxes from 10,000 to 30,000 SF across the county. CBRE wrote that Q2 leasing absorbed space vacated by retailer bankruptcies, and the fitness and entertainment deals above are a large part of how. We cover how owners are re-leasing those boxes in filling a closed big box in Orange County.

New supply

Very little is being built. Of the 321,531 SF under construction countywide, the South County piece Kidder Mathews lists is 30,000 SF at Dana Point Harbor, due in early 2027 as part of the harbor's rebuild. Wind & Sea closed there in September 2026 for that work (OCBJ). For existing centers, that means little new competition for tenants.

What it means for pricing a vacancy

• Price to recent comparable leases in your trade area, not the county average. In South County, an asking rent a little above the comps usually costs more in months vacant than it gains in rent.
• Expect to give more on older or less visible properties. Matthews wrote that those centers faced greater pressure to offer concessions or tenant improvements in Q2 2026. Our guide to TI allowance versus free rent shows how to compare packages.
• Market second-generation restaurant space as what it is. Hood, grease interceptor, patio and seating count are what restaurant groups look for first.
• For a big box, look past retail: fitness, recreation, entertainment, grocery, medical and off-price are signing.

Questions