South Huntington Beach, a vibrant coastal enclave in Orange County, California, embodies the quintessential Southern California lifestyle. Known for its pristine beaches, surf culture, and proximity to major attractions like Pacific City—a bustling outdoor mall with retail, dining, and entertainment options—this area has long been a magnet for tourists, residents, and businesses alike. As we navigate through 2025, the commercial real estate (CRE) landscape here is evolving amid broader economic shifts, including stabilizing interest rates, post-pandemic recovery, and a growing emphasis on mixed-use developments. South Huntington Beach, often referring to the regions south of downtown along Pacific Coast Highway (PCH), including areas near Huntington State Beach and extending toward Newport Beach borders, benefits from its strategic location. This positions it as a hub for retail, hospitality, and emerging mixed-use projects that blend commercial and residential elements.
The CRE market in South Huntington Beach is influenced by Orange County’s overall dynamics, where tourism drives demand for retail and hospitality spaces, while proximity to ports like Long Beach supports industrial needs. In 2024, Orange County saw contrasting trends: high office vacancies due to remote work persistence, resilient retail with low vacancies, and industrial spaces experiencing moderate loosening from new supply. For 2025, experts anticipate a balanced recovery, with lower interest rates spurring investor activity and construction. This blog post delves into key sectors, drawing on recent data to provide a comprehensive view for investors, developers, and stakeholders. Whether you’re eyeing a boutique retail spot or a hotel redevelopment, understanding these trends is crucial in this competitive market.
Overview of Commercial Real Estate in Orange County and Huntington Beach
Orange County, encompassing Huntington Beach, remains a powerhouse in California’s CRE scene, with over 222 million square feet of industrial space, 157 million in office, and 142 million in retail as of late 2024. Huntington Beach itself, with its 32 square miles, contributes significantly, particularly in coastal submarkets like South Huntington Beach, where beachfront proximity enhances property values. Upward trends in property appreciation, driven by coastal demand, make this area attractive for investors. For instance, cap rates in Huntington Beach compressed by 5 basis points in Q1 2025, ranging from 4.84% for Class A properties to 6.71% for Class C, signaling strong investor confidence.
Market stability is emerging after pandemic disruptions. Vacancy rates across sectors are peaking, with rents approaching troughs, setting the stage for recovery. Sales volumes in 2024 showed resilience; industrial sales rose 26.2% year-to-date, while office sales dipped 33.2%. Retail outperformed with a vacancy rate of 3.2%, below the five-year average of 4.0%. In South Huntington Beach, trends lean toward tourism-fueled growth, with mixed-use developments addressing inventory shortages. Interest rates, expected to stabilize further in 2025, could ease financing for projects, potentially increasing transaction volumes. However, challenges like economic uncertainty and regulatory hurdles, such as zoning changes for coastal properties, persist. Overall, the region’s proximity to ports, airports, and consumer bases bolsters its appeal, with submarkets like the Airport area in nearby Irvine drawing parallels for South HB’s potential.
Office Space Trends
The office sector in Huntington Beach, including South areas, faces headwinds from hybrid work models but shows signs of adaptation. In 2024, average office prices per square foot stood at $23.37, a 3.38% decline from the previous year, reflecting subdued demand. Orange County’s overall office vacancy rate held at 12.6% in Q4 2024, down 6.1% year-over-year, with asking rents at $2.83 per square foot (full-service gross), up 2.2% annually. Another report pegs vacancy higher at 18.8%, with a 50 basis point quarterly increase, highlighting submarket variations.
In South Huntington Beach, office spaces are limited, often integrated into mixed-use complexes like Pacific City, where tenants prioritize amenities like ocean views and walkability. Absorption improved by 353,000 square feet quarter-over-quarter in 2024, but sales volumes fell 33.2%, with average prices dropping to $212 per square foot. Sublease space, cheaper by 30.7% at $1.96 per square foot, indicates flexibility-seeking tenants. For 2025, static lease rates and vacancies are predicted, with smaller suburban markets like those in South HB leading due to limited supply. Investors should target Class A properties with modern features, as conversions from office to other uses gain traction amid uncertainty over long-term space needs.
Retail and Mixed-Use Developments
Retail in South Huntington Beach thrives on its coastal allure, with low vacancies underscoring resilience. Orange County’s retail vacancy stood at 4.1% in Q4 2024, down 1.6% year-over-year, with asking rents at $2.46 per square foot (triple net), up modestly. A separate analysis shows 3.2% vacancy, outperforming historical averages. In Q2 2025, vacancy rose slightly to 3.2%, still 40 basis points below the prior year.
Iconic spots like Bella Terra, a 1 million-square-foot lifestyle center in Huntington Beach, saw ownership changes in early 2025, with PGIM Real Estate acquiring full control after DJM Capital Partners sold its stake. South HB’s Pacific City exemplifies the shift to experiential retail, blending shops, eateries, and events. Trends favor smaller, smarter spaces in densely populated areas, with limited new construction due to high costs. Mixed-use projects are rising, integrating retail with residential to meet demand for walkable communities. For instance, a $29 million shopping center sale in 2023 highlights ongoing interest, though 2024-2025 focuses on adaptive reuse.
In 2025, lower interest rates could boost investor activity, with opportunities in neighborhood centers. Consumer habits evolve toward e-commerce hybrids, prompting owners to offer flexible leases. South HB’s tourism boost—drawing millions annually—supports retail, but competition from online giants requires innovation like pop-ups and tech integration.
Industrial and Warehouse Sector
Industrial spaces in Huntington Beach are more concentrated inland, but South areas benefit from logistics proximity. Orange County’s industrial vacancy reached 5.2% in Q4 2024, up 68% year-over-year, with 11.5 million square feet vacant. Asking rents stabilized at $1.59 per square foot (triple net), down 8.1% annually. Q2 2025 data shows vacancy at 4.4%, up 160 basis points year-over-year.
Demand from high-tech and logistics sectors drives activity, with smaller spaces under 200,000 square feet popular. Sales volumes rose 26.2% in 2024, averaging $314 per square foot. A recent sale of a 4,232-square-foot industrial building at 17872 Metzler Lane underscores market movement. For South HB, industrial is limited due to coastal zoning, but conversions from oil-related sites reflect trends. Supply chain shifts and AI adoption predict growth, with vacancy stabilizing in 2025. Investors eye value-add opportunities in upgrades for energy efficiency.
Hospitality and Tourism-Driven Real Estate
Hospitality in South Huntington Beach capitalizes on beach tourism, with recovery evident in 2025 metrics. Orange County’s hotel occupancy hit 70.8% in May 2025 (based on April data), up 1.1% year-over-year, with ADR at $199.21 (down 1.7%) and RevPAR at $141 (down 0.7%). Softened leisure demand faces short-term rental competition, but events like the 2026 FIFA World Cup promise 2-3% annual RevPAR growth through 2028.
A major development near Bolsa Chica proposes 800 housing units, a 350-room hotel, dining, shopping, and 23 acres of open space on 92 acres of former industrial land. This mixed-use project, requiring zoning approvals, reflects 2025 trends toward coastal transformations. Hotel construction slows, with only 520 rooms expected in OC by 2026. National trends show U.S. hotel occupancy nearing pre-pandemic levels, with outbound investments rising. South HB’s hotels benefit from eco-tourism near reserves, but economic risks loom.
Multifamily as a Commercial Asset
Multifamily properties in Huntington Beach, treated as CRE, offer stable returns amid housing demand. Recent sales include four properties brokered by CBRE in 2024. Near educational hubs like UC Irvine, these assets appreciate, with Orange County’s median prices at $1.3 million. South HB sees inventory rises easing competition, with trends toward balanced levels by late 2025. Shifts in Southern California multifamily markets predict increased activity in 2025.
Future Outlook and Investment Opportunities
Looking to the remainder of 2025, South Huntington Beach’s CRE is poised for resiliency. Lower rates may aid distressed assets, with submarkets near ports seeing heightened activity. Mixed-use and sustainability focus, like energy-efficient upgrades, will dominate. Challenges include regulatory delays, but opportunities in adaptive reuse abound. Investors should monitor events boosting tourism and consider creative structures like joint ventures.
In conclusion, South Huntington Beach’s CRE trends reflect a dynamic, recovering market. With strong retail and hospitality, balanced by cautious office and industrial outlooks, 2025 offers promising avenues for strategic investments. Stay informed to capitalize on this coastal gem’s potential.
