Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.
Issue link: https://westernrealestatebusiness.epubxp.com/i/566807
M A R K E T H I G H L I G H T: S A N D I E G O www.REBusinessOnline.com Western Real Estate Business • September 2015 • 25 San Diego's industrial market is on pace to be a record-setting year, as of the end of the second quarter. Countywide vacancy has plummeted to 5.76 percent due to another quarter of strong leasing and owner/user activity. The majority of San Diego's in- dustrial absorption has occurred on the fringes of the county. The southernmost submarket where this is occurring is Otay Mesa. This market has been a histori- cal laggard, but has recently wit- nessed a furry of leasing activity during the frst half of 2015. The drivers for Otay Mesa's demand are high-quality, large blocks of space, proximity for companies with maquiladora operations in Mexico and companies migrat- ing out of expensive central sub- markets in search of value. There is some speculative in- dustrial development breaking ground in the county for the frst time in almost 10 years. First Industrial Realty Trust and Mc- Donald Property Group has tilt- ed walls on First Park @ Ocean Ranch in Oceanside. The three- building, 237,000-square-foot project has received strong pre- leasing activity from users that like the northern San Diego loca- tion as a launching point to serve San Diego, Orange County, Riv- erside County and Los Angeles. Most importantly new projects like First Park ofers state-of-the- art features tenants are looking for. These include ESFR sprinkler systems, 30-foot minimum clear height and energy-efciency features that don't exist in most of the older inventory. Murphy Development will soon embark on another speculative project, a 122,000-square-foot building within its Siempre Viva Business Park in Otay Mesa. Owner/user activity has never been stronger in San Diego, with many companies utilizing their strong balance sheets and very attractive fnancing to purchase buildings. Owner/user pricing has exceeded previous peak pric- ing. High demand, lack of avail- able land, skyrocketing construc- tion costs and limited available inventory have constrained any new supply while driven up pricing. Industrial land pricing has ex- ceeded $20 per square foot in virtu- ally all markets except Otay Mesa. Some high-demand submarkets like Kearny Mesa, Miramar and parts of Carlsbad have seen land pricing reach more than $30 per square foot. San Diego's high-tech and fex markets are also witnessing a strong rebound, with major life science and pharmaceutical companies expand- ing their campuses in La Jolla, Uni- versity Towne Centre, Sorrento Val- ley, Sorrento Mesa, Oceanside and Poway. Several major defense contractors are also back in the market, cautious- ly expanding after years of downsiz- ing and belt tightening through the ugly days of sequestration. San Di- ego has always been a big defense and military town, and this should continue for the foreseeable future. 619.280.2600 • www.fockeavoyer.com • 6165 Greenwich Drive, San Diego, CA 92122 " I want to take this opportunity on behalf of the entire Flocke & Avoyer Team to thank all of our valued clients, associates and friends, for 30 years of collaboration, support and a lot of fun. We know everyone has choices when they select a broker and we are thankful that you have made us part of your Real Estate Team. " Steve Avoyer - President ExclusivEly REpREsEnting 20 Million sF REtail spacE in ovER 100 shopping cEntERs SAN DIEGO COUNTY'S INDUSTRIAL MARKET CONTINUES ITS HOT STREAK Mickey Morera Executive Vice President, Kidder Mathews