Industrial
Unemployment in the second quarter of 2006 in San Diego County was 3.7%, down 0.4% from the first quarter and 4.1% a year ago.
San Diego County added an estimated 23,400 non-farm jobs in 2005, with 35,000 new jobs expected this year, according to the Los Angeles County Economic Development Corp.
Personal income is expected to rise by 6.2% this year, the economic group said.
There is 1.9 million square feet of industrial construction under way, down 9.5% from a year ago.
Planned industrial construction in San Diego County is up compared to last year. There is 3.1 million square feet of industrial space on the slate, versus 2.8 million square feet a year earlier.
The industrial vacancy rate checked in at 6.2% in the second quarter, down from 6.4% a year ago. The lack of supply is creating a lot of constrained demand for industrial space in the county and is putting upward pressure on lease rates.
The average asking monthly lease rate in San Diego County is 71 cents per square foot, triple net. That’s the same as a year ago.
Rental rates are expected to increase 5% to 7% in 2006 as the economy continues to expand.
Industrial absorption checked in at 426,305 square feet during the second quarter. That makes 5 million square feet of positive absorption in San Diego’s industrial market during the past 10 quarters.
R & D;
There was 572,960 square feet of research and development construction under way in the second quarter, down 15% from a year ago.
San Diego County saw 605,018 square feet of R & D; development completed during the first half of the year.
R & D; construction planned for San Diego County is down from a year ago. There is 975,975 square feet of R & D; space on the planning slate, compared to last year’s 2 million square feet.
The vacancy rate for R & D; space in San Diego County was 10.7% in the second quarter, down from 11.9% in the first quarter and 11.6% a year ago.
The average annual asking lease rate for R & D; space in San Diego County was $1.37 per square foot, triple net. That’s up 3.8% from the lease rate a year ago of $1.32 per square foot.
Rental rates are expected to increase 5% to 7% this year as the economy continues to improve.
There was 738,638 square feet of positive net absorption in the R & D; sector during the second quarter. That makes 2.7 million square feet of positive absorption for the past seven quarters.
Office
There was 4.1 million square feet of office construction under way in San Diego during the second quarter, up 8.9% from 3.8 million square feet a year ago.
Office construction in the planning stages was 9.2 million square feet in the second quarter in San Diego County, down from 9.7 million square feet in the works a year earlier.
The office vacancy rate was 9.9% in the second quarter, unchanged from a year ago.
The low office vacancy rate is putting upward pressure on lease rates. The average monthly asking lease rate checked in at $2.63 per square foot per month on a full service basis during the second quarter.
The average lease rate, which is a record for San Diego County, was 1 cent higher than the first quarter and 6.1% higher than a year ago.
Office absorption checked in at a positive 487,044 square feet during the second quarter. There has been a total of 7.2 million square feet of positive office space absorption during the past 14 quarters in San Diego County.
Rental rates are expected to continue to increase at moderate levels in the short run, and concessions will lessen as San Diego County’s economy continues to expand.
These conditions will put upward pressure on lease rates. Rents are expected to grow 5% to 7% in 2006.
Retail
There was 2.7 million square feet of retail construction under way in San Diego County during the second quarter, up from 571,175 square feet a year ago.
Retail space in the planning stages was 4.4 million square feet in the period, up from 3.2 million square feet in the first quarter.
The retail vacancy rate was 3.1% during the second quarter, up from 2.7% posted a year ago in San Diego County.
The average monthly asking lease rate checked in at $2.02 per square foot, triple net, during the second quarter in San Diego County. That’s up 11.6% from a year ago.
The second quarter lease rate was a record for San Diego County.
Retail absorption was a positive 103,219 square feet during the second quarter. That makes 5.6 million square feet of positive absorption during the past 16 quarters in San Diego County.
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, which are expected to grow 5% to 7% in 2006.
Industrial
Unemployment in Las Vegas was 3.6% during the second quarter, down from 3.8% a year ago.
Meanwhile, the national unemployment rate was 4.6% in the quarter.
The Las Vegas Valley added an estimated 49,100 new jobs during the past 12 months, representing 5.6% growth. The industrial sector added 15,700 positions during the period for annual growth of 8.8%.
The industrial market in Las Vegas was comprised of 85.9 million square feet in 2,705 buildings at the end of the second quarter.
The Valley vacancy rate was 4% in the second quarter, with 3.4 million square feet of unoccupied space. Vacancy in the first quarter was 3.2% and 4.4% a year ago.
The industrial market expanded by 1.6 million square feet during the second quarter, with net absorption of 929,000 square feet.
More than 3 million square feet of industrial space came on the market in the first half of the year, putting Las Vegas on pace to exceed completions in 2005.
There was 5 million square feet of industrial space under construction in the second quarter, with 4.9 million square feet in the development stage.
Rising development costs and land availability concerns have the potential to limit industrial development activity in the long-run.
Office
The Las Vegas office market was comprised of 39.3 million square feet of space in 1,476 buildings at the end of the second quarter.
With 3.7 million square feet of unoccupied space, the Valley-wide vacancy rate was 9.4% in the second quarter, down from 9.2% a year ago.
New additions to the market contributed 1.2 million square feet, while net absorption was 669,400 square feet.
Healthy market expansions continued in the period, a product of the strong economic climate, relatively low interest rates, healthy investor activity and significant office condominium development seen during the past couple of years.
There was about 4.3 million square feet of office space under construction in the second quarter, with 5.6 million square feet planned for future development.
Retail
The Las Vegas retail market was comprised of 43.3 million square feet of space in 279 anchored centers at the end of the second quarter.
With 1.2 million square feet of unoccupied square feet, the Valley-wide vacancy rate was 2.7% during the second quarter. That’s slightly up from 2.5% reported during the first quarter but down from 3% a year ago.
New additions to the market during the quarter contributed 512,000 square feet, while net absorption was a positive 399,000 square feet.
Market expansion through the first half of the year nearly matched 2005’s total.
There was about 3.7 million square feet of retail space under construction during the second quarter. Retail space in the planning stages was 9.4 million square feet.
Taxable retail sales for the past 12 months in Southern Nevada were $35.2 billion, an increase of 9.1% from the prior year.
New home building permits (single and condominiums) for the past 12 months totaled 42,800, a 32.7% increase from the same period a year earlier.
Data and analysis by Jerry Holdner, vice president of market research at Voit Commercial Brokerage LP.
