San Diego’s office space market appears to be bottoming out with vacancy rates slowing trending lower and positive absorption. However there are still a number of great opportunities available for businesses in a position to lease or purchase commercial space.
San Diego County’s 111-million-square-foot office market is slowly starting to rebound according to recent data showing a drop in vacancy rates and positive net absorption.
The vacancy rate at the end of the year settled at 14.7 percent, down from a height of 15.5 percent in the first quarter of 2010. The slight improvement in the vacancy rate was due to the increase in leasing from 2009 to 2010. In 2010 there was double the amount of space leased. Last year however was still far below the amount of leasing that occurred in 2005 (vacancy rate of 8.5 percent), when more than 2.8 million square feet of office space was absorbed compared to about 1.2 million square feet in 2010.
Even though the market seems to have bottom the recovery will most likely take some time. John Galaxidas, the CEO of Synergy Real Estate Group states, “The market is not going to turn around quickly. Landlords could be struggling for the next 24-36 months, maybe longer, but on the bright side if you are a prospective tenant in the market place this works in your favor.” Brent Peterson the Vice President of Synergy’s San Diego office believes, “If you are in the market for office space and comfortable with your businesses financial future, now is the time to lock in a long term leases and take advantage of the low rental rates.”
There are certain office submarkets in San Diego that are doing well in regards to vacancy rates and some that are not. Carlsbad, Del Mar (Carmel Valley), and Scripps Ranch have some of the highest vacancy rates in the county. Coronado on the other hand has a vacancy rate around 2 percent, but it accounts for a small amount of the county’s office space. Either way 2011 is still an opportune time for tenants to take advantage of office leasing rates whether they are looking for space in La Jolla, UTC, Del Mar, Sorrento Valley, Downtown or any other area of San Diego County.
In regards to industrial space it looks like 2009 may have been the bottom, but do not expect a quick recovery. Some of the largest industrial markets still experienced rising vacancy rates including the north county markets (Carlsbad, Oceanside, Vista, San Marcos and Poway included). The South Bay market did see an improvement in vacancy rates moving from about 16 percent to 14 percent by year’s end.
If you would like more information please contact Brent Peterson of Synergy Real Estate Group at (858) 633-0480 or by email brentpeterson(at)synreg(dot)com.
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