continued “That tells you something about demand in the marketplace,” Carlson said. “If Irvine is bullish and raising rents, they tend to usually do that earlier than other groups. That tends to signify where UTC is today.”
Brett Ward, an executive managing director of the commercial real estate brokerage Cushman & Wakefield, said UTC had further to go than some other submarkets in rebounding from the recession because the Irvine Co. drastically cut rental rates during the recession to keep tenants from moving out.
JLL ranked UTC/Eastgate first in rent increases with what JLL reported as a 40.2 percent increase over the past seven years.
CBRE ranked UTC fourth, with what it reported as an increase of 40.7 percent between 2007 and 2010, behind Sorrento Valley at 48.4 percent, Sorrento Mesa at 42.8 percent and Governor Park at 42.2 percent.
One reason for the difference in numbers is that the brokerage firms define the submarkets differently.
For example, CBRE reported on Sorrento Mesa and Sorrento Valley separately and JLL did not.
Both CBRE and JLL have offices in UTC —– CBRE right in the mall, and JLL nearby in The Aventine.
Not surprisingly, Cushman & Wakefield reported that newer buildings command higher rental rates than older buildings.
The average monthly rental rate in projects built after 2010 as of the first quarter of 2018 at $2.92 per square foot was 21 percent higher than in buildings built before 1990, according to Cushman & Wakefield.
The catch is that most of the office buildings in San Diego County — about 71 percent – were built before 2000.
With demand for new and modern office space outpacing supply and rents on the rise, many landlords have responded by renovating their older property.
About 47 percent — 597,551 square feet – of the projects now under construction were renovations, Cushman & Wakefield reported.
They include the 339,000 square-foot Ampersand in the former Union-Tribune buildings in Mission Valley, the 168,000 square-foot 9625 Towne Center Drive, and the 50,000 square-foot Makers Quarter, Block D in downtown San Diego’s East Village.
At the end of 2017, about 1.3 million square feet of new office projects were under construction, with more than half of those in central San Diego submarkets.
Although not as high-performing as UTC and a handful of other submarkets, Rancho Bernardo was one central region cited by brokers as a submarket that has prospered since 2010 with a bright outlook looking ahead.