San Diego County CA— According to CBRE’s research, the surge of positivity surrounding the San Diego industrial market continues this quarter, it posted the highest positive net absorption since Q3 2006 and saw construction activity increase once again, according to CBRE research.
This quarter brought year-to-date net absorption to positive 3,235,297 square feet, and vacancy dropped for the 13th consecutive quarter to a more than 10-year record low of 4.4 percent. Southwest Riverside, has the lowest vacancy of all regions; it is currently at 2 percent total vacancy, followed by South San Diego which is at 5.1percent.
The overall San Diego industrial rates have increased this quarter by $0.02 to $1.10. High-Finish was relatively flat decreasing $0.01 to $1.58, while Low-Finish saw a $0.05 increase to $0.82. All current Low-Finish construction amounts to slightly over one million square feet, primarily in Oceanside, while all High-Finish construction activity is in the UTC submarket.
Net absorption has kept up its pace every quarter in 2015; this quarter posted 1,254,926 square feet of positive net absorption, which brings year-to-date net absorption up to 3,235,297 square feet. Every San Diego region posted positive net absorption this quarter. Central San Diego led the quarter with 581,045 square feet; however North County is the leader year-to-date with more than 1.2 million square feet. Every sub-type also posted positive net absorption.
Techbilt Companies delivered two speculative warehouses in Poway Corporate Center totaling 70,560 square feet. Both of these buildings were delivered 100 percent pre-leased by Best Buy and Grace Digital.
“The majority of current construction activity in North County is driven by build-to-suits, however nearly one third or 320,000 square feet is the first speculative construction we have seen since 2007,” said Adam Molnar, first vice president, of CBRE in the San Diego region. “With speculative construction more than 50 percent pre-leased, this provides added support for further speculative construction.”
These positive indicators have fueled more industrial construction this quarter—Siempre Viva Business Park broke ground on Building 18, a speculative 121,970-square-foot warehouse in Otay Mesa. Additionally, ground was broken on two new build-to-suits in Oceanside; Coca-Cola broke ground on a new distribution warehouse totaling 193,800 square feet and Magnaflow broke ground on a 91,974-square-foot light industrial building. These three new projects total 407,744 square feet, bringing total under construction square footage to 1,640,909 square feet.