"The Orange County retail market is gradually starting to feelthe effects of continued economic slowing," says John Przybyla,Marcus & Millichap regional manager who helped to prepare thereport. "With vacancies edging up and new product coming onlinethis year, local property owners won't experience the dramatic rentincreases from the past years."

Rents are expected to level off from last year's highs, due toan abundance of space coming onto the market and the slowdown inthe economy, the report says. Meanwhile, the overall vacancy rate,which currently stands at 5.3%, is expected to slowly start toincrease to 6%.

However, Przybyla predicts that the region will still attractinvestment dollars, even if at a slower rate than last year."Investors are still interested in the market as evidenced by localdeveloper and builder optimism with the Orange County economy,vacancy rates still well below 8% and unemployment rates under3.5%," he says.