San Diego CA— According to CBRE’s research, the San Diego retail market remained positive in Q3 2017.
“While concerns about the impact e-commerce remain, big box retail fundamentals have been consistently positive, mostly due to the rise of discount and off-price retailers and grocers,” said Reg Kobzi, senior vice president of CBRE. “In San Diego, Marshalls and Home Goods absorbed approximately 70,000 sq. ft., providing optimism that discount retailers could mitigate the e-commerce impact moving forward.”
In the first half of 2017, retailers absorbed 415,451 gross sq. ft. of big box space, leaving total vacancy about 30,000 sq. ft. lower than H2 2016. Discount and off-price retailers experienced the most growth and plan on expanding into more than 40 million sq. ft. nationwide.
The retail market in San Diego continued to trend positively in 2017, as average asking rates increased $0.01 quarter-over-quarter to $2.29 Triple Net Lease (NNN), the highest rate since the recession.
Net absorption remained positive this quarter at 123,756 sq. ft., bringing year-to-date net absorption to 313,140 sq. ft. Due to the strong net absorption, total vacancy rates declined 20 basis points (bps) quarter-over-quarter to 4.8 percent.
Year-over-year retail and food service employment growth rebounded to 0.9 percent, as employers may have adjusted to the City of San Diego’s $1.00 increase to the minimum wage enacted at the start of 2017. CBRE Econometric Advisors (CBRE EA) estimates retail and food service sales will grow by 4.1 percent over the next 12 months in San Diego.
This quarter there was no new shopping centers or new projects that were delivered or broke ground. Westfield UTC is set to open in Q4 after a $600 million renovation and expansion. The 1.1-million-square-foot retail center will add 395,000 square feet of retail space and will house CBRE’s central office that occupies over 30,000 sq. ft. The mall will feature a new Nordstrom, complete with a contemporary restaurant, along with almost 90 other new retailers.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com