SECOND QUARTER 2015 San Diego Industrial Market Report Partnership. Performance. Avison Young - San Diego 4225 Executive Square, Suite 600 La Jolla, CA 92037 858.201.7070 www.avisonyoung.com
SECOND QUARTER 2015 San Diego Industrial Market Report Partnership. Performance. Market Snapshot Asking Rent Market Overview Demand Continues to Tighten for Industrial and R&D Space in San Diego The San Diego Industrial Market is seeing an increase in competition for space in 2015. At the mid-point of 2015, vacancy continued to tighten while rents climbed even further, and in response, construction projects are now at pre-recession levels. San Diego s established industrial base supports the military, biotechnology and telecommunication sectors. The market s resilience is driven in part by its desirable geography making it a vital hub for logistics, as well as the quality labor pool which boasts an unemployment rate of 5.0% even with its continually expanding population. Vacancy Rates In the second quarter of 2015, vacancy rates reached 5.2%, the lowest levels seen in the current millennium. This is a significant year-over-year decrease from the rates of 7.4% seen in the second quarter of 2014. The trend of tightening vacancy has been consistent every quarter for the past 5 years. In the decade prior to that, vacancy hadn t dropped much below 7%, due in part to the much higher construction activity pre-recession. Developer confidence is expected to continue to increase in the face of this steady demand. Rental rates for the second quarter of 2015 have sharply reflected demand and risen to $1.01 psf. This is up from the rents of $0.87 psf that were seen at the same time one year ago. Current rents have now reached the highest levels that had been achieved in the past 15 years and are expected to hover around this threshold price point while potential new product emerges from the pipeline. Net Absorption Total net absorption stayed positive in the second quarter of 2015, at 513,700 sf. There was one new industrial building that came on-line in the second quarter of the year, with 56,862 sf in Oceanside, and it will be occupied by the owner, Olli Salumeria. This new building joins the R&D building that completed in the first quarter of the year, with 31,058 sf in Carlsbad, not preleased. Meanwhile, a total of nearly 1.3m sf of industrial and R&D space is under construction in the county, with over 600,000 already committed to tenants. There is over 5.8m sf of proposed industrial space in the county that is actively being marketed and waiting for commencement. The majority of this proposed space is located in South Bay and North County, which is also where the highest density of existing inventory is located. At this time, North County is seeing the bulk of the active construction progress, while South Bay is expected to follow suit as consumer confidence continues to improve. *The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
MAJOR LEASE TRANSACTIONS MAJOR SALE TRANSACTIONS UNDER CONSTRUCTION More than 5% of California's utility-scale energy came from solar in 2014, leading the rest of the country. San Diego ranks 2nd (behind Los Angeles) among U.S. cities for volume of rooftop solar panels. In 2015 San Diego ranks 17th among the top U.S. cities for the number of Energy Star rated buildings. Over 46 million sf. in 467 facilities, have achievd Energy Star labels in the county of San Diego. Of the 5.8 million sf of proposed industrial space reported in San Diego County, 26% of the volume is located in Otay Mesa and 22% of the volume is located in Sorrento Mesa and Mira Mesa. The population in San Diego County is experiencing a faster growth rate than that of the state as a whole, expanding 5.4% over the past four years. There are approximately 3,263,431 people living in San Diego County as of 2014. * The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
San Diego Regions By The Numbers *The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
* The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
Geographic Coverage N County Coastal Central Coast Central City Downtown N County Inland South Bay East County North County Coastal Oceanside Carlsbad Vista San Marcos Encinitas Solana Beach Del Mar Rancho Santa Fe North County Inland Escondido Rancho Bernardo Poway Mira Mesa/Miramar Scripps Ranch East County College Area Mission Gorge Lemon Grove El Cajon La Mesa Santee Central Coast Sorrento Valley Del Mar Heights/Carmel Valley Sorrento Mesa La Jolla Torrey Pines UTC Governor Park Central San Diego Old Town/Sports Arena/Point Loma Mission Valley North Park/South Park Bankers Hill/Hillcrest/Mission Hills Pacific Beach/Rose Canyon/Morena Kearny Mesa Downtown Business District Downtown San Diego South Bay Coronado Imperial Beach Chula Vista National City Otay Mesa Southeast San Diego Unemployment Rates San Diego County: Improving June 2015 5.0% June 2014 6.1% California: Improving June 2015 6.3% June 2014 7.6% United States: Improving June 2015 5.3% June 2014 6.3%
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