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Thursday, Mar 28, 2024
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San Diego Stats

San Diego County’s unemployment rate in the first quarter was 4.2%, 0.3% higher than it was in the fourth quarter, and the same from a year ago.

It’s estimated that San Diego County will add 11,800 non-farm jobs this year, and an estimated 19,500 jobs in 2008, according to Los Angeles County Economic Development Corp. It’s also forecasting a 3.5% gain in total personal income with inflation increasing by 2.5% this year.


Office Market

There was about 4.6 million square feet of office construction under way. Total construction rose 9% compared to the 4.2 million square feet that was under construction a year ago.

Planned office construction in San Diego County was up in the first quarter versus a year ago. There was 10 million square feet of office projects planned, compared to last year’s 9 million square feet.

The office vacancy rate was at 11.7%, higher than the 9.5% a year ago.

The average asking full service lease rate checked in at $2.69 a square foot per month in the first quarter. That was 2.7% higher than a year ago and set a new record high.

The office absorption checked in at positive 276,619 square feet for the first quarter of 2007, giving the San Diego office market a total of 1.15million square feet of positive absorption for the last five quarters.

Rental rates are expected to continue to increase at moderate levels in the short run, and concessions will lessen as the economy in San Diego County continues to expand. These conditions will put upward pressure on lease rates going forward. Rental rates are expected to rise 3% to 5% this year.


Industrial Market

There was about 1.7 million square feet of industrial construction under way. Total construction was down 17.4% compared to a year ago.

Planned industrial construction in San Diego County was up compared to last year. About 4.05 million square feet of industrial space was planned, versus last year’s 3.47 million.

The industrial vacancy rate checked in at nearly 6.2%, up from about 6% a year ago. This lack of supply is creating a lot of constrained demand for industrial space in the county area and is putting upward pressure on lease rates.

The average asking lease rate per month per foot in San Diego County was $0.73, triple net. That’s a 4.3% increase from last year. Rental rates are expected to increase 5% to 7% in 2007 as the economy continues to expand.

Industrial absorption checked in at 517,055 square feet of negative net absorption during the first quarter of 2007, giving the San Diego industrial market a total of 6.4 million square feet of positive absorption for the past three years.


R & D; Highlights

There was 61,226 square feet of research and development construction under way in the first quarter. That’s down 93.2% when compared to last year’s 907,352 square feet.

The decline occurred even though 277,676 square feet of new R & D; development was completed in the first quarter.

Planned R & D; construction in San Diego was up when compared to last year. There was 1.6 million square feet of R & D; space on the slate as being planned, compared to last year’s figure of 994,976 square feet.

The R & D; vacancy rate was 12.5%, up from 10.7% in the fourth quarter. That rate also was higher from a year ago, when the vacancy rate was 11.9%.

The average asking lease rate per month per foot in San Diego County was $1.42, triple net. That’s a 7.6% increase from last year’s first quarter rate of $1.32.

Rental rates are expected to increase 5% to 7% this year.

The market saw 314,144 square feet of negative net absorption during the first quarter.


Retail Highlights

About 787,208 square feet of retail construction was under way. Total construction was less than the 1.9 million square feet that was under construction in the first quarter last year.

Planned retail construction in the county was up. There was 3.3 million square feet of retail projects slated, versus last year’s 3.2 million square feet.

Vacancy rate was at a low 2.7%, down from 3.2% in the fourth quarter.

The average asking lease rate checked in at $1.98 a square foot per month, triple net, in the first quarter. This was lower than in the fourth quarter, and 6.4% higher than in the first quarter of 2006.

The retail sector saw positive absorption of 1.1 million square feet in the quarter, giving the San Diego retail market a total of more than 2.7 million square feet of positive absorption for the past five quarters.

Rental rates are expected to continue to increase at moderate levels in the short run, and concessions will lessen as the economy in San Diego County continues to expand. Rent’s expected grow 5% to 7% in 2007.

Data and analysis by Jerry Holdner, vice president of market research at Voit Commercial Brokerage LP.

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