In 2011, office, industrial and retail demand continued to improve as nearly 2.3 million square feet of positive net absorption occurred. Vacancy rates continued to decline and rental rates stabilized by year-end.
Beyond these statistics, the professionals at Colliers International point to some truly exciting opportunities for commercial real estate in 2012. Examples include strong demand for medical office space; residential land sales that set the stage for new residential development which facilitates demand for commercial space; and increased sales volume for both owners/users and commercial real estate investors alike. Colliers International expects these same trends will continue this year.
Demand for medical office space has been robust throughout the last few years, even as the recession has loomed over the county.
An aging population, evolving medical technologies and treatments, and strategic growth among hospitals and health systems (in large part due to health care reform), have driven up demand. “The story seems to be a tug-of-war between steady growth within certain specialties and sectors of health care versus shrinking reimbursements and rising uncertainty surrounding the future of private practice,” said Chris Ross, medical office specialist at Colliers International.
“Many doctors and medical groups are looking to consolidate or merge with other providers in order to counteract the challenges they face financially. However, leasing activity remains high and countywide vacancy just dropped into the single digits.”
Residential developers, anticipating demand for housing developments, have driven the sales volume of residential land over the last two years to pre-recession levels. “Due to constrained supply of developable land, prices for apartment land and single-family lots have increased,” said senior vice president and land specialist David Santistevan. “It appears that the recovery in the homebuilding sector is well under way.”
A final indicator of improving market conditions – according to senior vice president and industrial specialist Linda Greenberg – was that industrial, R&D and office sales activity was extremely strong in 2011 for both investment and owner/user sales. There were 113 industrial transactions totaling $710,290,000 and 187 office transactions totaling $652,689,000 indicating confidence in the market’s recovery.
The experienced professionals at Colliers International constantly analyze the real estate market to identify opportunities for their clients, regardless of the economic climate. Colliers International’s commitment to service excellence and specialized expertise strives to deliver solutions that fully meet the real estate objectives of their clients. For more information, please visit colliers.com or call 858-455-1515 in San Diego or 760-438-8950 in Carlsbad.