Home / Business / RealEstate / Industrial Post-Recession Records Continue Into the New Year in San Diego

Industrial Post-Recession Records Continue Into the New Year in San Diego

Average asking rates continue to climb from post-recession highs to unprecedented levels

San Diego County CA— According to CBRE’s research, San Diego’s industrial post-recession records continue into the near year. The San Diego industrial market carried the positive momentum into the beginning of the 2018.

“The San Diego industrial market remains extremely tight, especially for functional, Class A warehouse product,” said Sean Williams, CBRE’s industrial expert. “Absorption slowed in Q1 2018 but that is to be expected with such a limited inventory- there just isn’t enough space to be absorbed. The new product coming on the market is seeing good user interest and leasing activity. I predict 2018 to be similar to 2017, renewal transactions will outnumber new deals, high watermarks will continue to be hit on rental rates, and absorption will continue to trend positively but at a more moderate pace.”

Average asking rates for both high and low-finish product continued to climb from post-recession highs to unprecedented levels. Both high-finish and low-finish product reached all-time highs in Q1 2018, reaching $1.42 NNN (lease triple net) and $0.91 NNN, respectively. The rise

in asking rate was due in part to below-average price product getting absorbed and above average-price product hitting or remaining on the market.

Net absorption slowed in Q1 2018, but remained positive with 107,860 sq. ft. North County, specifically Carlsbad, experienced the most positive absorption in Q1 due to sizeable new deals and leased construction deliveries which carried absorption in the region over 200,000 for the quarter.

Despite net absorption being positive for the fourth straight quarter, the overall vacancy rate in the county increased 20 bps to 4.0 percent, due largely to two of the three delivered buildings coming on as vacant in Q1. A few large vacancies in Kearny Mesa (131,000 sq. ft.), South Bay (103,000 sq. ft.) and East County (90,000 sq. ft.) contributed to the increase.

Overall leasing activity in the county was 3,063,886 sq. ft., an increase of nearly 537,000 sq. ft (+21.2 percent) year-over-year. General leasing activity in Carlsbad surpassed 600,000 sq. ft., which was the most for the submarket in the post-recession era.

Construction activity continued to push post-recession highs, with 37 buildings totaling 3,286,554 sq. ft. under construction in Q1 2018, while 10 new buildings broke ground in Q1, including six small warehouse buildings at Poway Tech Center totaling 82,742 sq. ft. Warehouse product has the most square footage under construction with 2,490,393 sq. ft., a majority of which resides in North County.

Click here for full report.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), 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 2017 revenue). The company has more than 80,000 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.