09
Jul2014
Voit/CORFAC: San Diego County Office and Industrial Lease Rates Rise, Availability Rates Decline
Contact:Joshua Brant(858) 453-0505JBrant@voitco.com San Diego, CA (July 9, 2014) – The San Diego County office market’s recovery showed continued signs of maturation through the first half of 2014. The office availability rate dropped over 50 basis points to 15.77%, the lowest mark posted since the end of 2007. The second quarter of 2014 marked the seventh consecutive quarter of rising lease rates. The average asking full-service gross lease rate finished the second quarter at $2.32 per square foot per month, an increase of 8.41% from 2013’s second quarter average asking lease rate, according to a new Second Quarter Market Report from Voit Real Estate Services/CORFAC International.
“The ongoing improvement in rental rates is a clear sign of the recovery, and the good news is that there is still room for rates to persist in their upward trend” explains Joshua Brant, Market Research Analyst at Voit. “The downward movement in availability rates, demonstrates that the market continues to improve, which further supports the recovery we’ve been forecasting for the past 12 to 24 months.”Demand for Office Product Driven By Class A Office Buildings. As a whole, the San Diego County office market posted a modest 125,000 square feet of positive absorption in this first half of 2014, yet Class A office product contributed 440,000 square feet of positive net absorption towards that total, according to Voit’s report.
“Quarter after quarter, Class A offices continue to drive the recovery in every facet, including rental rates, net absorption, and new construction” he explains. “Average asking rental rates for Class A office are now over 35% higher than Class B, and the overall vacancy rate for Class A office is nearly 30% lower than Class B.”
Another trend to note, according to Brant, is the tempered nature of office development in this recovery. “Developers are more pragmatic regarding new office construction in this recovery versus the last, which is somewhat based upon the slow and steady nature of the recovery itself. The moderate level of office construction will continue to contribute to market stability going forward.”Vacancy in Industrial Market Reaches Pre-Recession Levels. The San Diego County industrial market continued improving in the first half of 2014 with significant improvement over the Mid-Year 2013 indicators. “Overall in the San Diego County industrial market, year over year vacancy is down 19%, the availability rate is down 16% and the average asking rental rate has risen over 6%, all of which are impressive tallies” Since the start of 2010 the San Diego County industrial market has posted eighteen consecutive quarters of positive net absorption totaling over 6 million square feet.
The largest sale of the second quarter was the nearly half a million square foot North County Corporate Center in Vista. “In the past five years there have only been three local industrial portfolios over 450,000 square feet that have sold. Voit represented or advised parties in two of those three transactions,” noted Brant.
“Overall, we continue to see improvement in both the office and industrial markets, and we anticipate positive gains moving forward, provided job creation continues and consumer confidence stabilizes.”About Voit Real Estate Services/CORFAC International
Voit Real Estate Services/CORFAC International is now an 11 office commercial real estate firm that, through its brokerage and real estate management professionals working together, provides strategic property solutions tailored to clients' needs. Combining more than 40 years of expertise in brokerage, investment advisory, financial analysis, market research, real estate management and tenant advisory, 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 55 million square feet of commercial real estate, participated in $1.4 billion of construction projects and completed over $40 billion in brokerage transaction volume. Further information is available at www.voitco.com.
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