first quarter 2015 san diego industrial market report energy came from solar in 2014, leading the...
TRANSCRIPT
Partnership. Performance.
FIRST QUARTER 2015
San Diego Industrial Market Report
Avison Young - San Diego 4225 Executive Square, Suite 600La Jolla, CA 92037858.201.7070
www.avisonyoung.com
Demand Continues to Tighten for Industrial and R&D Space in San Diego
Vacancy Rates
Net Absorption
Partnership. Performance.
FIRST QUARTER 2015
Market Overview
San Diego Industrial Market Report
Market Snapshot Asking Rent
* The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
The San Diego Industrial Market has started the New Year with a continuation of the economic trends that evolved in 2014. In the first quarter of 2015, vacancy continued to tighten while rents climbed, and in response, construction projects reached pre-recession levels for the first time. San Diego’s established industrial base supports the military, biotechnology and telecommunication sectors. The market’s resilience is driven in part by its desirable geography making it a vital hub for logistics, as well as the quality labor pool which boasts an unemployment rate of 5.3% even with its continually expanding population.
In the first quarter of 2015, vacancy rates reached 5.8%, the lowest levels seen in the current millennium. This is a significant year-over-year decrease from the rates of 7.5% seen in the first quarter of 2014. The trend of tightening vacancy has been consistent every quarter for the past 5 years. In the decade prior to that, vacancy hadn’t dropped much below 7%, due in part to the much higher construction activity pre-recession.
Rental rates for the first quarter of 2015 have sharply reflected demand and risen to $0.97 psf. This is up from the rents of $0.86 psf that were seen at the same time one year ago. Current rents have now reached the highest levels that had been achieved in the past 15 years and are expected to hover around this threshold price point while potential new product emerges from the pipeline.
Total net absorption stayed positive in the first quarter of 2015, at 997,529 sf. There was one new R&D building that came on-line in the first quarter of the year, with 31,058 sf in Carlsbad, not preleased. Meanwhile, a total of 1,289,110 sf of industrial and R&D space is under construction in the county, with 365,056 sf expected to deliver in 2015. There is nearly 4.3 msf of proposed industrial space in the county that is actively being marketed and waiting for commencement. The majority of this proposed space is located in South County (Otay Mesa) and North County, which is also where the highest density of existing inventory is located. At this time, North County is seeing the bulk of the active construction progress, while South County is expected to follow suit as consumer confidence continues to improve.
First Quarter 2015 | San Diego Industrial Report
M A J O R L E A S E T R A N S A C T I O N S
M A J O R S A L E T R A N S A C T I O N S
U N D E R C O N S T R U C T I O N
Of the 4.3 million sf of proposed industrial space reported in San Diego County, 39% of the volume is located in Otay Mesa and 21% of the volume is located in Vista.
In 2015 San Diego ranks 17th among the top U.S. cities for the number of Energy Star rated buildings. Over 46 million sf. in 467 facilities, have achievd Energy Star labels in the county of San Diego.
The population in San Diego County is experiencing a faster growth rate than that of the state as a whole, expanding 3.7% over the past three years. There are approximately 3,211,252 people living in San Diego County as of 2013.
More than 5% of California's utility-scale energy came from solar in 2014, leading the rest of the country. San Diego ranks 2nd (behind Los Angeles) among U.S. cities for volume of rooftop solar panels.
* The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
S a n D i e g o R e g i o n s B y T h e N u m b e r s
First Quarter 2015 | San Diego Industrial Report
* The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
First Quarter 2015 | San Diego Industrial Report
* The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
First Quarter 2015 | San Diego Industrial Report
G e o g r a p h i c C o v e r a g e
East County College AreaMission Gorge
El CajonLa MesaSantee
Lemon Grove
Downtown Business District Downtown San Diego
Central San Diego Old Town/Sports Arena/Point Loma Mission Valley North Park/South ParkBankers Hill/Hillcrest/Mission Hills Pacific Beach/Rose Canyon/Morena Kearny Mesa
South Bay CoronadoImperial Beach Chula Vista National CityOtay MesaSoutheast San Diego
Central Coast Sorrento ValleyDel Mar Heights/Carmel ValleySorrento MesaLa JollaTorrey PinesUTCGovernor Park
North County Inland EscondidoRancho Bernardo PowayMira Mesa/Miramar Scripps Ranch
North County Coastal OceansideCarlsbadVista San Marcos EncinitasSolana Beach Del MarRancho Santa Fe
N County Inland
N County Coastal
East County
South Bay
Central City
Central Coast
Downtown
San Diego County: Improving
Feb 2015 5.3%
Feb 2014 7.0%
California: Improving
Feb 2015 6.7%
Feb 2014 8.0%
United States: Improving
Feb 2015 5.5%
Feb 2014 6.7%
U n e m p l o y m e n t R a t e s
Avison Young at a Glance
Contact Information - Southern California, United States
213.935.7430 323.851.6666
www.avisonyoung.com
310.899.1800424.265.9200
Los Angeles - Downtown 555 S Flower St, Ste 3200Los Angeles, CA 90071 Primary Contact: Ted [email protected]
Los Angeles - North6711 Forest Lawn DrLos Angeles, CA 90068 Primary Contact: Mark Evanoff [email protected]
Los Angeles - West10940 Wilshire Blvd, Ste 2100Los Angeles, CA 90024Primary Contact: Neil Resnick [email protected]
Los Angeles - Santa Monica 301 Arizona Ave, Ste 303 Santa Monica, CA 90401 Primary Contact: Randy [email protected]
San Diego - La Jolla4225 Executive Sqr, Ste 600 La Jolla, CA 92037Primary Contact: Jerry [email protected]
858.201.7070
Orange County - Irvine 2030 Main Street, Ste 150 Irvine, CA 92614Primary Contact: Dan [email protected]
949.757.1190
Report Prepared By:Amber Jagers - Research Manager4225 Executive Sqr, Ste 600La Jolla, CA 92037
Regional Managing Director: Chris Cooper - Corporate 555 S Flower St, Ste 3200 Los Angeles, CA 90071
© 2014, Avison Young (Canada) Inc. The statistics contained in this report were obtained from sources deemed reliable, including Avison Young, Bureau of Labor Statistics, CoStar Group Inc., Real Capital Analytics, Inc., Reis Services, LLC, State of CA Employment Development Department, U.S. Green Building Council. However, Avison Young (Canada) Inc. does not guarantee the accuracy or completeness of the information presented, nor does it assume any responsibility or liability for any errors or omissions. All opinions expressed and data provided herein are subject to change without notice. This report cannot be reproduced in part or in full in any format without the prior written consent of Avison Young (Canada) Inc.
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