Industrial
As one of the pillars of San Diego, the defense industry continues to show San Diego’s industrial market is supported by groundbreaking work in the biotech and life science industries, especially in the UC San Diego area.
In the fourth quarter of 2018, the industrial market experienced an increase in rental rates from $1.13/SF to $1.29/SF due to a lack of supply and steady demand. The absorption also increased to a positive 1.5 million SF caused by a limit in construction and strong demand, while the average vacancy rate increased from 9.6% to 9.7% robust growth. Sublet SF experienced an 11.59% rise in the final quarter, hitting 1.8 M SF.
Office
In the fourth and final quarter of 2018, San Diego’s office market remains on firm footing. The rental rates have slightly increased from $2.66/SF to $2.69/SF, while the absorption also increased to positive 123,000 SF. Sublet SF is currently at 1.7 M SF, a 27.83% rise from a year ago.
The average vacancy rate increased from 9.6% to 9.7%. Low vacancies and limited spec construction have helped San Diego’s rent growth, with annual increases in the range of the long-term average. At the end of 2018, there were 936,640 SF of office space under construction. Construction has slowed down considerably with build-to-suit playing a prominent role, and speculative construction accounting for very little of new development.