CORFAC News

SAN DIEGO, Calif., (OCTOBER 13, 2011) – In the third quarter of 2011, San Diego’s office market posted 468,008 square feet of positive net absorption - a substantial increase over the previous quarter’s negative net absorption - while the region’s industrial market continued its trend of positive absorption, posting 175,884 square feet, according to the Third Quarter Market Report by Voit Real Estate Services/CORFAC International. San Diego’s industrial market has produced 1.37 million square feet of positive absorption over the past seven quarters, with only one quarter of negative net absorption during that time.“Ongoing positive net absorption is the big story, and it’s a strong indication that the market is stabilizing,” said Chris Wood, Managing Director of Voit’s San Diego office. “During the third quarter we saw a bit of hesitation due to the uncertainty of the financial markets, but with absorption remaining positive and vacancy and availability continuing to descend, we expect that confidence will return quickly and that we will see a bump in activity in Q4 as transactions are pushed to close before the year’s end.”Increased Occupancy in San Diego’s Office Market    Voit reported that both vacancy and availability were down in San Diego’s office market in the third quarter of 2011, a sign that recovery is underway, according to Wood.  Vacancy was at 14.67 percent in Q3, down from 15.15 percent in the previous quarter and a six percent decrease, year over year. Availability also declined slightly, with a rate of 17.55 percent in the third quarter, compared to 17.88 percent in the second quarter of 2011.  “We are beginning to see a decrease in the amount of available space being added per quarter, and with very little construction we will see less pressure on vacancy, which will continue to help stabilize the office market,” commented Wood.  Office sales and leasing activity for the San Diego market totaled 2.5 million square feet in the third quarter, an increase of nearly 370,000 square feet from the previous quarter’s total.   Lease rates increased during the third quarter of 2011, with the average asking full-service gross lease rate at $2.15 per square-foot per month - three cents higher than the previous quarter’s rate and the same as 2010’s third quarter rate.Industrial Sales and Leasing Activity Spikes in San DiegoVoit reported a jump in transaction activity in the San Diego industrial market during the third quarter of 2011, with 1.67 million square feet of industrial space leased - a 12 percent increase over the previous quarter. Sales activity also showed a year-over-year increase, with 910,000 square feet of property sold in the third quarter as compared to the 640,000 square feet sold during the third quarter of 2010.“It’s evident that industrial sales and leasing are on the rise in San Diego, and we expect to see more investment activity in the coming quarters as lenders continue to dispose of distressed assets,” commented Wood. Asking lease rates remained steady in the third quarter, with the average asking triple-net lease rate in San Diego’s industrial market ending the quarter at $0.66 per square-foot per month. This rate is unchanged from the preceding seven quarters, which is a clear indication that lease rates have hit bottom, according to Wood.In addition, availability improved, with the third quarter displaying an availability rate of 11.8 percent, down from the previous quarter’s rate of 12.02 percent, and substantially lower than 2010’s third quarter rate of 12.36 percent. Vacancy in the San Diego industrial market ticked down to 8.3 percent in the third quarter of 2011, nearly 5 percent lower than 2010’s third quarter rate of 8.73 percent. “A five percent vacancy rate would instigate a swing from a tenant’s market to a landlord’s market, and the San Diego industrial market is only three small percentage points away from reaching that number,” said Wood. “This means that tenants should take advantage of deals now, while the market is in their favor.”Voit Real Estate Services is now a 10 office commercial real estate firm that, through its brokerage and asset services professionals working together, provides strategic property solutions tailored to clients’ needs. Combining nearly 40 years of expertise in property management, investment advisory, financial analysis, market research, asset management, tenant advisory and brokerage services, Voit provides clients with forward looking strategies that create value for their assets and portfolios.Voit is a privately held, debt-free firm that has successfully navigated numerous market cycles since 1971 and currently employs more than 250 people. An affiliate of CORFAC International, Voit has owned, developed and managed over 45 million square feet of commercial real estate, participated in $1.35 billion of construction projects and completed over $33 billion in brokerage transaction volume. Further information is available at www.voitco.com.