The San Diego industrial market continued on the trail towards recovery as the vacancy rate fell 20 basis points from the previous quarter, as reported in Newmark Grubb Knight Frank’s Third Quarter San Diego Industrial Market Report. The improvement in occupancy levels was the result of demand for warehouse/distribution space, which represented 59% of the year-to-date net absorption. The vacancy rate for warehouse/distribution space dropped 80 basis points from one year ago, with the average asking rate for such space ending the quarter at $0.63/sf - steady over 2011.
Key statistics for the San Diego industrial market during the third quarter of 2012 are as follows:
• The San Diego industrial market vacancy rate decreased for the third consecutive quarter to 10.1%
• The region experienced roughly 377,000, square feet of positive net absorption during the quarter, raising year-to-date total absorption to more than 1.2 million square feet.
• Quarter-over-quarter, monthly asking rental rates for warehouse/distribution space increased $0.01 to $0.63/sf. Asking rental rates for R&D/flex space decreased $0.02 to $1.09/sf.
• Significant new leases signed during the third quarter include the approximately 73,000-square-foot build-to-suit for EagleBurgmann in the East County. Layfield Group leased 67,344 square feet at the Rancho San Diego Industrial Center in Spring Valley. Morgan Stanley & Co. purchased Miramar Commerce Park, a 366,080-square-foot, multi-tenant warehouse/distribution investment.
Steve Wolf, senior managing director for Newmark Grubb Knight Frank’s San Diego operations, says, “Larger, functional warehouse/distribution space in the Central San Diego submarkets is scarce and therefore is commanding higher rents This will have a spillover effect on the entire region.
“The demand for warehouse/distribution space continues to strengthen. There is a sense of urgency to grab the good deals before a rise in rents takes a hold of the market. As the supply of warehouse/distribution space declines, a rise in rents will be more pronounced,” he added.
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About Newmark Grubb Knight Frank
A part of BGC Partners, Inc. (NASDAQ:BGCP), Newmark Grubb Knight Frank is one of the largest commercial real estate service firms in the U.S. It brings together the strategic consultative approach to creating value for clients and leading position in the New York market that are hallmarks of Newmark Knight Frank; the complementary strengths of Grubb & Ellis in leasing and management, investment sales, valuation and capital markets services; and BGC’s financial strength, proprietary technology, expertise in global capital markets and deep relationships with many of the world’s leading financial institutions.
Newmark Grubb Knight Frank, together with its affiliates and London-based partner Knight Frank, employs more than 11,000 professionals, operating from more than 300 offices in established and emerging property markets on five continents. This major force in real estate is meeting the local and global needs of tenants, owners, investors and developers worldwide.