San Diego Business Journal

Green Office Buildings Outperform Others Locally

By Lou Hirsh Thursday, September 6, 2012

The San Diego region’s green office buildings are outperforming their less environmentally friendly counterparts, posting lower vacancy and commanding higher rents so far in 2012, according to a new report by the brokerage firm CBRE.

The overall vacancy rate for green buildings was 4 percent lower than for non-green properties — 11.7 percent, compared to 15.7 percent at the midpoint of 2012. Green buildings commanded an average $2.42 per square foot in gross asking rent, compared with $2.04 for non-green buildings.

CBRE said green office buildings in the first half benefited from the “flight to quality” trend in several submarkets, as local tenants sought out higher-quality workspaces with more amenities, with rates and incentives comparable to their former locations in older or less-green properties.

Local buildings certified under the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) program continued to command the highest rents, at a weighted average gross asking rate of $2.52 per square foot in the second quarter, up 4 cents from both the prior quarter and the second quarter of 2011.

Asking lease rates in Energy Star buildings averaged $2.40 per square foot in the second quarter, up 2 cents from the previous quarter but down 4 cents from a year ago.

San Diego County has more than 18 million square feet of green office space, with submarkets in the city of San Diego containing the majority of properties with LEED and Energy Star designations, according to CBRE.

Downtown San Diego leads with just over 7 million square feet, followed by University Towne Center with 3.2 million and Mission Valley with 2.1 million square feet.