With the year nearly halfway over, CB Richard Ellis (NYSE: CBG) reports that San Diego is on track to have another remarkable year in commercial real estate. That claim is supported by CBRE market data and the fact that CBRE has had a hand in some of the county's largest commercial real estate transactions in 2006.
Missions at Sunbow -- $86 million. The Missions at Sunbow, LLC sold The Missions at Sunbow, a 336-unit luxury condominium rental community located at 825 East Palomar Street in Chula Vista, to Equity Residential. J. Kevin Mulhern, Dixie Hall, Rachel Hemingway and Dick Schneider of CB Richard Ellis' San Diego Central office represented both the seller and the buyer in the transaction.
Carlsbad Pointe -- $48 million. RREEF through CalWest Industrial Holdings, LLC sold Carlsbad Pointe, a 328,655-square-foot building located at 5781 Van Allen Way in Carlsbad, to Griffin Capital Corp. on behalf of 29 tenant-in-common investors. Nick Psyllos, Larry Jackel, Chris Pascale and Rick Sparks of CB Richard Ellis represented the seller, and David Cantwell from Studley represented the buyer.
Club Pacifica -- $43.3 million. The RSD Group sold Club Pacifica, a 240-unit condominium rental community located at 12191 Cuyamaca College Drive East in the Rancho San Diego area of San Diego, to Silverstone Communities. J. Kevin Mulhern, Dixie Hall, Dick Schneider and Rachel Hemingway of CB Richard Ellis' San Diego Central office represented both the seller and the buyer in the transaction.
LabCorp -- $21.9 million. LabCorp has signed a 10-year lease with LBA Realty for 109,780 square feet at 13112 Evening Creek Drive South in the Sabre Springs Business Park, just east of the I-15 freeway. Jerry Keeney, Brent Wright and Rob Merkin of CB Richard Ellis represented the landlord, LBA Realty.
Brittania Crossing -- $15 million. Otay Crossing Inc. sold a 151,244-square-foot industrial building, located at 2199 Brittannia Boulevard in Otay Mesa, to Master Development. Shane Harmon, Rich Kwasny, Rob Hixson and Allen Evans of CB Richard Ellis represented the seller and Darren Mullins and Louay Alfadek of Grubb & Ellis BRE represented the buyer.
Otay Pacific -- $13.8 million. Otay 60 Development sold a 62.5-acre parcel of industrial land, located along the U.S. International border in the city of San Diego, to Wohl Property Group. Rob Hixson, SIOR, of CB Richard Ellis represented both the buyer and the seller, with assistance from Rich Kwasny and Shane Harmon, also of CB Richard Ellis.
RD America Inc. -- $12.3 million. RD America Inc., doing business as Restaurant Depot, signed a 15-year lease with Manulife Insurance for 93,139 square feet of industrial space, located at 7466 Carroll Road in the Miramar neighborhood of San Diego. Dean Asaro with CB Richard Ellis represented both the lessor and lessee.
El Centro Mall -- $11.3 million. El Centro Mall, LLC sold El Centro Mall, a 178,889-square-foot enclosed mall located at 1002 -- 1150 N. Imperial Avenue, to HRG Fresno THS, LLC. Reg Kobzi and Joel Wilson of the CB Richard Ellis Retail Private Client Group's San Diego office, along with Brad Jones, also of CB Richard Ellis, represented the seller.
According to CB Richard Ellis' first quarter 2006 commercial real estate market statistics, the data for office, industrial and retail real estate all indicate that the San Diego market remains strong.
CB Richard Ellis' market statistics indicate that activity in the San Diego office market was relatively steady during the first quarter as demand was noticeably stronger than last year at this time. Some highlights of the office market include the following:
* Although net absorption was steady during the quarter, San Diego's office vacancy rate crept up to 9.1 percent primarily due to recent construction completions totaling 530,000 square feet.
* Downtown Class A rents continue to increase as investors seek to justify record prices paid for recent building acquisitions. These submarkets are asking upwards of $3.50 to $3.75 plus electric, compared to $3.00 to $3.25 at the end of the third quarter.
* The suburban office market has also experienced significant rent growth over the past six months, particularly in the high-end Class A submarkets, such as Del Mar Heights, UTC, Mission Valley and downtown.
The San Diego industrial market ended the first quarter at a good pace as tenant demand continued to be steady, especially with smaller tenants requiring less than 10,000 square feet, according to CB Richard Ellis' industrial market report. Other highlights include:
* At the end of the first quarter, industrial net absorption totaled more than 1.2 million square feet. As a result, the area's vacancy rate dropped to 5.6 percent.
* The latest three-year asking rent growth rate stands at an average of 3.1 percent per year since the end of 2002, although there has been little to no growth over the last 12 months.
* There is currently more than 4.8 million square feet of new construction under way, most of which is located in outlying submarkets such as Otay Mesa, Oceanside, East County and Temecula. This is largely due to the greater inventory of developable parcels, as well as the lower land prices in those areas.
* Product types with the most activity during the quarter were warehouse/distribution space and corporate headquarter space.
The market statistics also show that the San Diego retail market continued its steady pace, as net absorption levels were solid and vacancy rates continued to be low. This trend has been the norm over the past few years as the countywide vacancy rates has hovered below 4 percent since the fourth quarter of 2002. Additionally, other highlights in the retail market include:
* San Diego continues to have one of the lowest unemployment rates in the country at 4.1 percent, well below the national rate of 5.1 percent and California's rate of 5.4 percent.
* Demand for retail space held strong during the first quarter as net absorption totaled more than 183,000 square feet, most of which occurred in new completions (70 percent).
* The average asking lease rate for retail space increased during the first quarter from $2.03 to $2.07, representing the 10th straight quarterly increase.
CB Richard Ellis is the top-ranking commercial real estate brokerage firm for gross sales in San Diego. The firm operates out of offices in North County, Golden Triangle, downtown San Diego and a recently opened office in Temecula.
Whitelaw is principal of Whitelaw Marketing.