FIRST QUARTER 2015 San Diego Industrial Market Report Partnership. Performance. Avison Young - San Diego 4225 Executive Square, Suite 600 La Jolla, CA 92037 858.201.7070 www.avisonyoung.com
FIRST QUARTER 2015 San Diego Industrial Market Report Partnership. Performance. Market Snapshot Asking Rent Market Overview Demand Continues to Tighten for Industrial and R&D Space in San Diego 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. Vacancy Rates 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. Net Absorption 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. *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.
MAJOR LEASE TRANSACTIONS MAJOR SALE TRANSACTIONS UNDER CONSTRUCTION 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. 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. 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. 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. * 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.
San Diego Regions By The Numbers *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 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.
Geographic Coverage N County Coastal Central Coast Central City Downtown N County Inland South Bay East County North County Coastal Oceanside Carlsbad Vista San Marcos Encinitas Solana Beach Del Mar Rancho Santa Fe North County Inland Escondido Rancho Bernardo Poway Mira Mesa/Miramar Scripps Ranch East County College Area Mission Gorge Lemon Grove El Cajon La Mesa Santee Central Coast Sorrento Valley Del Mar Heights/Carmel Valley Sorrento Mesa La Jolla Torrey Pines UTC Governor Park Central San Diego Old Town/Sports Arena/Point Loma Mission Valley North Park/South Park Bankers Hill/Hillcrest/Mission Hills Pacific Beach/Rose Canyon/Morena Kearny Mesa Downtown Business District Downtown San Diego South Bay Coronado Imperial Beach Chula Vista National City Otay Mesa Southeast San Diego Unemployment Rates 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%
Avison Young at a Glance Avison Young, a real estate company committed to you. We deliver results that are aligned with your strategic business objectives, support real estate initiatives that add value, and build competitive advantage for your organization. A Growing, Multinational Presence Avison Young is the real estate partner businesses trust for intelligent, integrated solutions. Avison Young is Canada s largest independently owned commercial real estate services company. Founded in 1978 as Graeme Young & Associates of Edmonton; Merged with and Avison & Associates in 1996 to form Avison Young. In 2009, Avison Young began international expansion and has since opened 45 U.S. and 5 European offices. In 2011-2014, Avison Young won designation as one of Canada s Best Managed Companies, Canada s most prestigious corporate award. In 2015, Avison Young was named a Canada s Best Managed Companies Gold Standard winner (2014). Avison Young is the world s fastest-growing commercial real estate services firm. Headquartered in Toronto, Ontario, Avison Young is a collaborative, global firm owned and operated by its principals. Founded in 1978, the company comprises 1,700 real estate professionals in 66 offices, providing valueadded, clientcentric investment sales, leasing, advisory, management, financing and mortgage placement services to owners and occupiers of office, retail, industrial and multi-family properties. Contact Information - Southern California, United States Los Angeles - Downtown Los Angeles - West Los Angeles - North 555 S Flower St, Ste 3200 10940 Wilshire Blvd, Ste 2100 6711 Forest Lawn Dr Los Angeles, CA 90071 Los Angeles, CA 90024 Los Angeles, CA 90068 Primary Contact: Ted Simpson Primary Contact: Neil Resnick Primary Contact: Mark Evanoff ted.simpson@avisonyoung.com neil.resnick@avisonyoung.com mark.evanoff@avisonyoung.com 213.935.7430 424.265.9200 323.851.6666 Los Angeles - Santa Monica 301 Arizona Ave, Ste 303 Santa Monica, CA 90401 Primary Contact: Randy Starr randy.starr@avisonyoung.com 310.899.1800 Orange County - Irvine 2030 Main Street, Ste 150 Irvine, CA 92614 Primary Contact: Dan Vittone dan.vittone@avisonyoung.com 949.757.1190 San Diego - La Jolla 4225 Executive Sqr, Ste 600 La Jolla, CA 92037 Primary Contact: Jerry Keeney jerry.keeney@avisonyoung.com 858.201.7070 Regional Managing Director: Chris Cooper - Corporate 555 S Flower St, Ste 3200 Los Angeles, CA 90071 213.935.7435 chris.cooper@avisonyoung.com Report Prepared By: Amber Jagers - Research Manager 4225 Executive Sqr, Ste 600 La Jolla, CA 92037 858.201.7072 amber.jagers@avisonyoung.com www.avisonyoung.com 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.