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Permits for commercial alterations/additions still lead S.D. construction

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San Diego County industrial permit activity in October remains at a standstill, commercial permits are picking up, and nonresidential alterations and additions continue to outpace the other categories, according to a Construction Industry Research Board (CIRB).

And with industrial vacancies exceeding 10 percent in many submarkets, neither developers nor lenders feel the need to commit to more space.

This is true in Otay Mesa, where there is 3 million square feet of industrial space.

March was the last time permits were actually pulled for industrial buildings in the county, and only $36.4 million worth were pulled through the first 10 months of 2011.

Permits for new commercial construction -- which includes office, retail and hotel projects -- totaled $34.2 million in October, up from zero commercial permits pulled in October 2010.

New commercial permits in October included $20.7 million for a 127,000-square-foot, build-to-suit office building on Research Place in the Nobel Research Center campus in the University Towne Centre area. The permit is for only the shell.

October's total also included a permit for a $12.6 million, four-level parking structure at 2608 Via de la Valle in San Diego.

The CIRB counted $199.4 million worth of commercial permit activity through October, more than double the $74.2 million in October 2010.

For at least the past three years, the strongest category in terms of dollar permit volume has been nonresidential alterations and additions.

The CIRB tallied $56.6 million in nonresidential alterations and additions in October alone -- 19.2 percent more than the $47.5 million a year ago.

For the year's first 10 months, the CIRB counted $567.3 million in nonresidential alterations and additions -- up 62.9 percent from $348.26 million in 2010.

Ben Bartolotto -- the CIRB research director who noted that nonresidential alterations and additions are also strong in the state as a whole -- said the category amounted to 63.1 percent of the nonresidential total in San Diego County so far in 2011.

This is compared to 2006, when the commercial alterations and additions were just 33 percent of the total.

The statewide figures have similarly flipped their positions during that time, as well.

"Historically, the alterations and additions have been well below the totals for the new properties," Bartolotto said.

Bartolotto said the reasons aren't completely clear why nonresidential alterations and additions continue to outpace the other categories.

"I suspect this is in large part due to the ability (or lack thereof) to finance," Bartolotto said, adding the properties' age and other factors are also reasons for the increase in commercial alteration and addition activity. "There are too many reasons to generalize."

In a category known as "other" -- which includes everything from driveways to pump stations -- permits were pulled for just $3.88 million worth of work in October. That was compared to $16.7 million in October 2010.

While there weren't many permits pulled in the "other" category in October, it is a different story when year-to-date permits are counted.

CIRB counted $143.3 million in the "other" category through October -- or 32.2 percent more than the $108.4 million last year.

All nonresidential building in San Diego County amounted $94.6 million in October alone -- up 47.5 percent from the $64.2 million in October of last year.

A total of $913.73 million worth of nonresidential permits were pulled for the first 10 months of 2011 -- up 70 percent from $537.4 million through October 2010.

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