San Diego County’s unemployment rate in the first quarter was 4.1%, down from 4.7% a year ago.
The county added 17,800 new non-farm jobs in 2005, with 22,600 jobs expected to be added this year, according to the Los Angeles County Economic Development Corp. Personal income is expected to rise 6.2% this year.
There was 4.3 million square feet of office construction under way in the first quarter, up from 2.7 million square feet that was under construction a year earlier.
There was 9 million square feet of office construction in the planning stages in San Diego County in the period, down 10% from a year ago.
The office vacancy rate was at 9.5% in the first quarter, down from 9.7% a year ago. Low vacancy is putting upward pressure on lease rates.
The average asking full service lease rate checked in at a record $2.62 a square foot per month in the first quarter. Rates were up 4% from the fourth quarter and 7% from a year ago.
Office absorption was a positive 349,538 square feet during the first quarter. The market has posted a total of 6.7 million square feet of positive absorption during the past 13 quarters.
Rental rates are expected to continue to increase at moderate levels in the short run, with concessions lessening as San Diego’s economy continues to expand.
These conditions are expected to put upward pressure on lease rates of 5% to 7% in 2006.
There was 2.1 million square feet of industrial construction under way in the first quarter, more than double from a year ago.
Industrial construction in the planning stages fell to 3.5 million square feet in the first quarter, down from 3.7 million square feet a year ago.
The industrial vacancy rate checked in at 6% in the quarter, in line with a year ago.
A lack of supply of industrial space in San Diego County has created pent-up demand in the region, with lease rates feeling upward pressure.
The average asking lease rate was 70 cents per square foot per foot in San Diego County in the first quarter, up 2.9% from a year ago.
Rental rates are expected to increase 5% to 7% in 2006 as the economy continues to expand.
The industrial sector posted 423,183 square feet of positive net absorption in the period. San Diego has recorded 4.6 million square feet of positive absorption during the past nine quarters.
There was 907,352 square feet of construction under way in San Diego’s research and development sector during the first quarter. That’s more than four times higher than a year earlier.
About 171,00 square feet of R & D; space was completed in the period.
R & D; space in the planning stages was 994,976 square feet in the first quarter, down from 1.7 million square feet a year ago.
San Diego’s R & D; vacancy rate was 12% in the first quarter, up from 10.7% a year ago and 11.3% in the fourth quarter.
The average asking lease rate for R & D; space in San Diego was $1.37 per square foot per month in the quarter, up 1.5% from a year ago. Rental rates are expected to increase 5% to 7% in 2006.
There was 36,755 square feet of negative net absorption during the first quarter, giving San Diego a total of 1.9 million square feet of positive absorption during the past six quarters.
There was 1.9 million square feet of retail construction under way in the quarter, up from 831,296 square feet a year ago.
Retail development in the planning stages was 3.2 million square feet in the first quarter.
The retail vacancy rate rose to 3.2% in the first quarter, up from 2.9% a year ago.
The average asking lease rate checked in at $1.86 per square foot per month, triple net, in the quarter. That’s up 2.2% from a year earlier and is a record high for San Diego’s retail sector.
There was negative absorption of 430,555 square feet during the first quarter, though the retail market has posted a total of 5 million square feet of positive absorption during the past 15 quarters.
Rental rates are expected to continue rising at moderate levels in the short run. Concessions are expected to lessen as the economy in San Diego County continues to expand.
These conditions are set to put upward pressure on lease rates going forward.
