• News
  • Real Estate

Jan.-Feb. commercial permits in San Diego a fraction of '08

Related Special Reports

Commercial and industrial permit activity in San Diego County during the first two months of the year was but a fraction of the level a year earlier, and nonresidential alterations and additions were down significantly as well.

According to a Construction Industry Research Board (CIRB) report, permits valued at nearly $23 million were pulled for commercial buildings -- a category that includes office, retail and municipal structures -- during the first two months of 2009.

That was down from about $72.13 million for the like period in 2008.

While some large projects can skew the numbers in any given month, the commercial permit totals have been trending downward in the county for at least the past year.

For February alone, only $4.97 million worth of commercial permits were pulled.

The CIRB tallied some $50.9 million worth of commercial permits in February 2008.

Retail vacancy, despite the departure of such national companies as Mervyn's, Circuit City and Linens 'N Things, has managed to remain at less than 5 percent here, according to most surveys.

Still, financing hasn't been available for almost any asset class, let alone retail.

And even if it were, retail brokers are quick to point out that readily developable sites remain in short supply.

Downsizing with its shrinking of space demands, has boosted office vacancy levels so that markets such as Carlsbad and the Interstate 15 Corridor could take years to fill even without new construction.

A Colliers International report, for example, said Carlsbad had a 25.6 percent direct office vacancy rate as of the end of last year That translated into more than 1.41 million square feet of space.

In the I-15 Corridor, the direct vacancy rate was 17 percent according to Colliers at the end of last year.

That translated into more than 1.1 million square feet of direct available space at a time when companies have continued to shrink.

A mere $1.28 million worth of industrial project permits were pulled for the first two months of 2008, and no industrial permits were pulled in the county at all in February.

Such an event isn't unprecedented. It last happened here in January 2008. Permits were pulled for $4.39 million worth of industrial properties in February 2008.

Vacancy surveys by local brokerage offices vary.

By Colliers' accounts, the industrial vacancy had climbed from 8.38 percent at year-end 2007 to 9.05 percent at the end of 2008.

Cushman & Wakefield placed the year-end industrial vacancy at 7.4 percent.

Several reasons have been cited for the lack of industrial construction.

Not only is financing difficult, land is too expensive ($15 to $20 and more) in most parts of the county to make such a project viable.

In Otay Mesa, where land prices tend to be cheaper, the problem is a surplus of industrial space.

Colliers for example, pegged the industrial vacancy at 21.1 percent on Otay Mesa as of the end of the year after the submarket had experienced 180,000-square feet of negative absorption in the fourth quarter.

The good news for Otay is that with few developable industrial parcels readily available for quite some time, the vacant space is expected to get leased sooner than what otherwise might be possible.

In the CIRB category of "other," which includes everything from outbuildings to public driveways, permits for $19.4 million worth a work were pulled through the first two months of the year, compared to $12.8 million for the like period a year earlier.

The CIRB tallied $9.88 million in the "other" category in February alone. That was actually an improvement from $7.38 million in February 2008.

However, both figures are a sharp decline from the $21.9 million in "other" permits pulled as recently as last August.

Nonresidential alterations and additions amounted to $67 million through February.

While this was down from $85.2 million for the like period a year earlier, it is still a respectable figure when compared to past years.

February to February nonresidential alteration figures were only slightly off -- $32.4 million last month from $36.1 million in the comparable month a year ago.

User Response
0 UserComments