ORANGE COUNTY, CA-Big-box retail space in Orange County that had been left empty by retailers including Sears and Best Buy is being re-tenanted, but it's not prompting smaller retailers to fill in the gaps, according to Marcus & Millichap. A recent market report from the firm shows that less-prominent retailers are taking a “wait and see” attitude before committing to leases next to new anchors such as Lifetime Fitness and Hobby Lobby.

As a result, many neighborhood and community centers are experiencing a prolonged recovery despite retail sales that have recently surpassed the pre-recession peak. The market could also get a boost from national online sales-tax legislation that levels the playing field between brick-and-mortar retailers and online retailers.

Tenants that occupy the smaller footprints at neighborhood/community centers are particularly susceptible to heightened competition from online stores, the report says, so the new legislation could be just the ticket some struggling merchants need to avoid closing their doors.

In addition, the research shows that buyers will migrate inland in search of higher yields and value-add opportunities in the multi-tenant sector this year. A sector previously dominated by risk aversion has given way to risk taking on high-quality properties, although some investors will shy away from strip centers in areas with softer demographic trends.

The report also reveals that new assets, particularly those near once-maligned housing communities, are in high demand and can fetch high prices. Cap rates for two- or three-tenant properties filled with national-credit tenants are only modestly above single-tenant cap rates, but multi-tenant assets have boomed in popularity over the past year as buyers show some resistance to prices in the single-tenant market.

GlobeSt.com was unable to reach Bill Rose, national director of M&M's National Retail Group and Net Leased Properties Group, to discuss what he feels are the most significant retail trends in Orange County.

While many investors favor national-credit tenants like Starbucks and Chipotle, more diversity is expected to emerge this year, M&M reports. Although interested buyers will focus on due diligence, assets with a long-standing operating history and local tenants will be more likely to trade.

As GlobeSt.com reported last week, at the Marcus & Millichap "Retail Trends" event at ICSC RECon, there was plenty of optimism. GlobeSt.com sat down with Hessam Nadji, who heads up the firm's research and advisory services, before the panel to discuss trends.