A survey released March 9 categorized the San Diego industrial property market and multifamily property market as “sell” markets and the San Diego retail property market as a “buy.”
Irvine-based Sperry Van Ness, a commercial real estate investment brokerage firm, released its 2005 report titled “Top 10 Markets to Watch For Commercial Real Estate Investors.” The report cites the best buyer and seller markets to watch in each of the four core commercial property types retail, office, industrial and multifamily. While San Diego did not make all of the survey’s lists, it did rank No. 7 in the industrial seller market to watch, No. 7 in the multifamily seller market to watch and No. 10 in the retail buyer market to watch.
In the industrial survey, the Sperry Van Ness report said that in markets categorized as “sell,” a combination of “depressed manufacturing and cutbacks in the technology sector has inhibited interest in industrial investments.”
In the multifamily market, Sperry Van Ness said that although apartments have been coveted by investors seeking low-volatility assets, perhaps cap rates are as low as they can get in the “sell” markets. “For some markets, the timing looks right to take profits at what looks like a cyclical value peak,” the report said.
Finally, in the retail market the only one in which San Diego was considered a “buy” the report characterized San Diego as a “tight market.” Despite the fact that the average price per square foot on retail property in San Diego is at $222, the market “promises acquirers substantial leverage at the tenant/landlord negotiating table,” according to the report.
Researchers for Sperry Van Ness identified the top seller and buyer markets for each property type by looking at the average vacancy rate, the volume of sales, the average sale price per square foot or unit, and the capitalization rate for properties in 47 U.S. cities. It also took into account the prospects for job growth.
Researchers reviewed a representative sample of commercial property transactions from markets that are valued at a minimum of $5 million for the main surveys. In a smaller summary report, the researchers evaluated properties from $1 million to $5 million.
In the category of properties under $5 million, San Diego ranked No.8 market to watch for sellers of office property and No. 8 for sellers of multifamily property as well.