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San Diego Office Market

Average Asking Rent (Price/SF/Mo) $2.65
Vacancy Rate (%) 13.0%
Net Absorption (SF) 110,003

Occupancies of buildings delivered in or after 2015 accounted for 76.1% of net absorption during the second quarter of 2017. At the submarket level, Carlsbad and UTC posted the largest absorption gains, while Kearny Mesa accounted for over 60% of the losses in the market. The second-quarter vacancy rate was 80 basis points lower than at this time last year. The current rate is also lower than the five-year average of 13.8%. Available sublet space is at its lowest rate in five years and represents just 2.2% of current inventory. Under construction speculative space totaled 875,000 square feet, a slight increase from one year ago. One Paseo broke ground in Del Mar Heights and will add approximately 280,000 square feet to the market in late 2018. The average asking rent of $2.65/SF remained relatively flat year-over-year. Average rental rates for Class B product rose 4.9% over the same period, whereas Class A rents only saw a 0.3% gain.

San Diego Industrial Market

Average Asking Rent (Price/SF/Mo) $0.93
Vacancy Rate (%) 4.6%
Net Absorption (SF) 101,606

Tenant renewals were very common this quarter, while new construction deliveries were nonexistent. As a result, vacancy was relatively flat, down just 20 basis points from one year ago. While net absorption was positive this quarter, it was negative in the first half of the year with 278,571 square feet. In a tight market, just a few tenant move-ins or move-outs can affect absorption totals. A lack of available land and entitlement barriers are constraining development. Only 490,689 square feet was under construction. Only one project delivered over the last six months: el.e.vate at Carlsbad North, a 156,977-square-foot facility nearly 50.0% leased to date. Future absorption gains will primarily come from new construction (and renovation) leasing. Although the total average asking rent across all property subtypes was flat compared with one year ago, warehouse rents saw a healthy gain of 4.6% over the same period.



San Diego Office Market Report
2Q17
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San Diego Industrial Market Report
2Q17
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