SAN DIEGO-Massive levels of net absorption ranked 2014 as the strongest year for demand in the last nine years. That is according to a recent report from Colliers International.
The quarterly positive net absorption trend in industrial/R&D space in San Diego County has remained consistent for the past four years. While new construction was keeping a similar pace over the last five years, it is expected construction will elevate over the next few years, the report says.
The report says that the November 2014 San Diego County unemployment rate measured 5.8%, which remained unchanged from October. The California rate increased to 7.1% (+0.1%) while the national rate stayed flat at 5.5%. As of August 2014, San Diego County experienced a year-over-year increase in non-farm employment totaling 43,000 jobs.
"The combined industry sectors of 'Trade, Transportation and Utilities' and 'Manufacturing' - the two predominant industrial-utilizing employment sectors - posted a net increase of 9,000 jobs in San Diego County over the same period."
The Q4 2014 combined industrial/R&D net absorption totaled a positive 1.2 million square feet. Industrial/R&D absorption was immense for 2014, driving nearly 3.26 million square feet of net absorption, the report says.
The countywide overall industrial/R&D average asking rental rate has been slowly and steadily increasing after remaining in the low $0.80 range from 2010-2013. In Q4 2014, the average rate increased to $0.96 per square foot per month, exhibiting a $0.06 increase over the Q3 average of $0.90 per square foot per month, the report says.
"While unlikely to post the same magnitude of demand as in the prior three years, 2015 will still be a strong year for demand where activity is likely to fall between 1 and 2 million square feet of net absorption," the report says.
Throughout 2014, only four buildings were completed totaling 382,299 square feet, according to Colliers. This figure includes the first building of HCP Inc.'s new Ridgeview Business Center-a 115,000 SF build-to-suit for lease to General Atomics. Additionally, a 156,421-square-foot speculative building on Business Park Drive in Vista, a 70,158-square-foot build-to-suit for EagleBurgmann in Lakeside, and a 40,720-square-foot build-to-suit for Poway Weapons & Gear in Poway were completed during the year.
Currently only 112,824 square feet is under construction including an 83,000-square-foot build-to-suit for Olli Salumeria in Oceanside and a new 29,824-square-foot building on Paseo Del Lago that was destroyed earlier in 2014 by a wildfire that displaced the then occupant, Sound Elkin, the report says.
Proposed new development totals nearly 5.77 million square feet. "As the market continues to improve, we will likely see more new build-to-suit and speculative construction break ground over the next couple of years."
The talk of spec development being all the rage in San Diego isn't only in the industrial sector. As GlobeSt.com previously reported, Mark Read of Kidder Mathews