San Diego’s long-beleaguered downtown retail property market is showing signs of life, with vacancies declining and space absorption up from year-ago levels, according to a new report from Cushman & Wakefield’s Urban Property Group.
The brokerage firm said downtown’s midyear retail vacancy rate stood at 10.6 percent, down from 11.4 percent at the same point of 2011. Year-to-date positive net absorption was 36,626 square feet at the midpoint, compared with 25,795 square feet a year ago and a negative 46,212 square feet in the first half of 2010.
“While the vacancy has stabilized, overall leasing activity rebounded significantly in the first half of 2012 with approximately 160,000 square feet of retail lease transactions,” said David Maxwell, senior associate with the Urban Property Group. “This activity has nearly tripled from where we were at this time last year.”
Senior Director Bill Shrader, founder of the Urban Property Group, noted that downtown’s overall retail vacancy remains in the double digits, but new retail development is being spurred in part by new residential construction, especially mixed-use apartment projects.
“We are seeing the cranes and construction sites again as a handful of mixed-use projects are under construction scheduled for delivery in 2013 and 2014, with nearly 100,000 square feet of retail to come on line in the next couple years in the downtown area,” Shrader said.
Cushman & Wakefield said the East Village reported the most positive leasing activity and largest drop in vacancy in the first half, with nearly 30,000 square feet absorbed. East Village, Horton and Little Italy were the only three downtown neighborhoods to report positive absorption activity — more space being filled than vacated.