The San Diego County office market showed continued signs of recovery in 2013, posting more than 1.175 million square feet of positive net absorption. The fourth quarter of 2013 marked the seventh consecutive quarter of positive net absorption and the second consecutive year of rising lease rates. The average asking full-service gross lease rate finished the fourth quarter at $2.22, an increase of nine cents from 2012’s average asking rate, according to a new Fourth Quarter Market Report from Voit Real Estate Services.
“This is good news for the San Diego County market overall,” said Chris Wood, executive managing director at Voit. “The rise in lease rates, while modest, demonstrates that the market continues to improve, which further supports the recovery we’ve been forecasting for the past 12 to 24 months.”
Another positive note for 2013 was The Irvine Company beginning the first significant speculative office construction in San Diego County since the downturn.
The San Diego County industrial market continued to stabilize and recover in 2013 with the fourth consecutive year of positive net absorption, and a two-cent increase in asking lease rates, with drops in both vacancy and availability.
Both vacancy and availability continued trending downward throughout 2013. Vacancy ended the fourth quarter of 2013 at 7.13 percent, the lowest rate since the third quarter of 2008. Likewise, availability posted a rate of 10.42 percent at the close of the year, a substantial decrease of 25 percent from the recession high point of 13.87 percent.
Asking lease rates have edged up, and lease concessions are scaling back from the peak of the recession, but the county’s annual job losses in manufacturing employment have been a headwind to the recovery.
In 2013, Voit brokers, including Randy LaChance, Todd Holley, Jeff Chasan, and Paul Brown, executed two of San Diego County’s five largest industrial lease and sale transactions in terms of dollar value for the year.
“Overall, we continue to be cautiously optimistic about the San Diego County market,” Wood said. “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.”