San Diego County’s unemployment rate in the fourth quarter was 4.2%, off 10 basis points from the third quarter and down from the 4.4% posted a year ago.
The county added 21,900 nonfarm jobs in 2005, with about 23,000 new jobs forecast for 2006, according to Los Angeles County Economic Development Corp. Personal income is expected to rise by 6.8%.
There is 4 million square feet of office construction under way, up from the 3.2 million square feet that was being built a year ago.
Office space in the planning stages is slightly lower than a year ago. There is 9.2 million square feet on the planning slate in San Diego, versus 9.3 million square feet last year.
Office vacancy at the end of 2005 was 9.61%, up from 9.45% at the end of 2004.
The average asking full service lease rate checked in at $2.52 per square foot per month in the fourth quarter.
That’s 5 cents higher than the third quarter and 5.9% higher than a year ago.
Office market absorption was a positive 885,713 square feet in the fourth quarter. There was a total of 2.5 million square feet of absorption in 2005.
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 of 5% to 7% in 2005.
There is 1.2 million square feet of industrial construction under way in San Diego County, down by about 20% compared to a year ago.
Planned industrial construction in San Diego County also is down. There is 3.5 million square feet of industrial space in the planning stages, versus 4.8 million square feet a year ago.
The industrial vacancy rate checked in at 6.25%, which is about the same as last quarter when it was 6.27%. The lack of supply is creating a lot of constrained demand for industrial space in the San Diego County area and is putting upward pressure on lease rates.
The average asking lease rate in San Diego County was 69 cents per square foot per month, triple net. That’s a 6.15% increase compared to 65 cents per square foot a year earlier.
Rents are expected to increase 5% to 7% this year as the economy continues to expand.
There was 361,246 square feet of positive net absorption during the fourth quarter, giving the market a total of 2 million square feet of positive absorption for 2005.
There was 787,806 square feet of research and development construction under way in San Diego in the fourth quarter, down 29% from a year ago.
The county has about 1.1 million square feet of space in the planning stages, versus 1.6 million square feet a year ago.
The vacancy rate in the R & D; sector was 11.3% in the period, down slightly from the third quarter and higher than last year’s rate of 10.4%.
The average asking lease rate in San Diego County was $1.37 per square foot per month in the fourth quarter. That’s a 7% increase from a year ago.
Rental rates are expected to increase 5% to 7% in 2006 as the economy continues to improve.
R & D; absorption was 66,485 square feet in the fourth quarter, giving the San Diego R & D; market a total of 1.4 million square feet of positive absorption last year.
Data and analysis by Jerry Holdner, vice president of market research at Voit Commercial Brokerage LP.
