CORFAC News

Contact:Jenn Quader / Judith BrowerBrower, Miller & Cole(949) 955-7940JQuader@browermillercole.comSan Diego, CA (October 9, 2012) – San Diego’s office and industrial markets demonstrated ongoing recovery in the third quarter of 2012, according to a Third Quarter Market Report from Voit Real Estate Services/CORFAC International.  Office lease rates increased, rising from their bottom during Q3, while the industrial market posted its tenth consecutive quarter of positive net absorption.“These numbers are positive indicators that the San Diego market is moving toward continued recovery,” said Chris Wood, Managing Director of Voit’s San Diego office. “As we predicted, lease rates are beginning to increase, and more space is being absorbed, which will help support a recovery. We expect that this trend will continue, resulting in a further increase in investment and leasing activity throughout the remainder of 2012 and 2013.”Lease Rates and Occupancy Continue to Climb in the San Diego Office Market  The San Diego office market posted 442,444 square feet of positive net absorption in the third quarter— the largest volume of positive absorption seen in five years, according to Wood.  In addition, lease rates increased nominally for the second consecutive quarter in the third quarter of 2012.  The average asking full-service gross (FSG) lease rate per square foot per month in San Diego County ended the quarter at $2.13.Voit’s third quarter market report indicates that vacancy in direct/sublease office space finished the quarter at 14.07 percent, roughly a quarter of the way back to the 8.6 percent rate seen in 2005, which was the lowest point the office vacancy rate reached in the previous period of economic expansion.  Availability of office product in San Diego dropped 4.0 percent when compared to 2011’s third quarter, ending the quarter at 16.84 percent.“The office market has been steadily improving over the last two years,” noted Wood.  “San Diego’s office market is diverse, with various industries contributing to its ongoing recovery.  Moving forward, professional and business services, leisure and hospitality, defense companies, and medical and alternative energy companies will continue to lead the charge of positive absorption.” Wood also noted that construction is reviving in the San Diego office market, as the total amount of office space under construction checked in at 1.45 million square feet in the third quarter of 2012, the vast majority of which has been pre-leased.San Diego Industrial Market Demonstrates Ongoing Positive Absorption The San Diego County industrial market continued its path to recovery in the third quarter of 2012, posting 420,244 square feet of positive net absorption, marking the tenth consecutive quarter of positive net absorption. Voit’s Q3 market report indicates that vacancy of direct/sublease industrial space finished the quarter at 7.49 percent - the lowest level since the beginning of 2009. Kearny Mesa, which consists of more than five million square feet of industrial inventory, posted the lowest vacancy rate in the county at 3.00 percent. “We are forecasting that vacancy will continue its downward trend into 2013, ending the first half of the year at around 7.1 percent,” Wood notes. Voit predicts an increase in industrial investment activity in the coming quarters, especially as lenders continue to dispose of distressed assets in submarkets such as Otay Mesa. “We will see ongoing recovery in the San Diego industrial market, provided that employment gradually grows and consumer confidence continues to stabilize,” explained Wood.  “The big issue is that rents are far from being able to justify new construction.  It will be a few years before new industrial supply is delivered to central San Diego, therefore vacancy will keep declining.”About Voit Real Estate Services/CORFAC InternationalVoit 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 40 years of expertise in brokerage, investment advisory, financial analysis, market research, asset management, tenant advisory and property management 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. Voit has owned, developed and managed over 50 million square feet of commercial real estate, participated in $1.4 billion of construction projects and completed over $36 billion in brokerage transaction volume.  Further information is available at www.voitco.com.About CORFAC InternationalCORFAC International (Corporate Facility Advisors) is distinguished by the way it manages multi-market commercial real estate assignments on behalf of corporate entities and privately owned companies. Founded in 1989, U.S.-based CORFAC is comprised of privately held entrepreneurial firms with expertise in office, industrial and retail real estate leasing and investment sales, multifamily property acquisitions and dispositions, property management and corporate services in North America, with coverage in South America provided by Panama-based Latin American Corporate Property Services. A Principal Member of FIABCI – the International Real Estate Federation with global affiliates in Europe and Asia, CORFAC International offers commercial real estate services with market reach in 65 countries worldwide. In recent years, CORFAC firms have averaged 10,000 completed transactions annually encompassing nearly 100 million square feet and valued at more than $6 billion. For more information on CORFAC, contact 703.532.6160 or visit www.corfac.com.