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Tuesday, Jun 25, 2024

Report Cites Glut of Office Vacancies

The San Diego office market is facing an oversupply problem rivaling that of the housing market, according to Studley’s third-quarter office market report released Oct. 27.

Studley, a New York City-based commercial real estate firm specializing in tenant representation, reported a 15 percent vacancy rate in office space in San Diego in the third quarter. This rate is 1.4 percent higher than the previous quarter and 3.8 percent higher than the same quarter last year.

The report said that while vacancy rates have fluctuated during the past 15 years, the protracted recession is having a clear impact on the office market , something San Diego has not experienced in more than a decade.

Overall vacancy is at its highest since the 1990s.

“The oversupply in the office market will prolong the recovery process,” the report said. “The San Diego market has added 2 million square feet to its inventory in the last year and currently has another 2.4 million square feet under construction. This, combined with the 2.5 million square feet in available sublet space, is compounding the surplus.”

There is currently 10.8 million square feet of available office space in the region.

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Team To Build City Hall Complex:
Goodyear Civic Center Developers of San Diego will develop a new $67 million city hall and library complex in Goodyear, Ariz. The development team consisting of San Diego-based Lankford & Associates, JMI Sports, Carrier Johnson and Phelps Development of Greeley, Colo., also gained the rights to develop and lease more than 1 million square feet of additional office, retail and residential space on the 40-acre site located 17 miles west of Phoenix.

The Goodyear City Council unanimously approved the development agreement Oct. 20.

Construction will begin in December 2009; completion is scheduled for January 2011.

JMI Sports is also the development manager for the $100 million Goodyear Ballpark and Recreational Sports Complex for the Cleveland Indians and the Cincinnati Reds. The ballpark is under construction and is scheduled for completion next year.

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Histogen Leases R & D; Space:
Histogen signed an eight-year lease valued at $9.1 million for 27,700 square feet of research and development space in Sorrento Valley.

Histogen is a regenerative medicine company formed in 2007. The company will relocate from its current University Towne Center site to Sycamore Creek Research Park on Sorrento Valley Road.

Dave Odmark of Grubb & Ellis|BRE Commercial represented both the lessee and lessor, Dansk Investment Group.

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Retail Center Refinancing:
The San Diego central office of CB Richard Ellis Capital Markets Group arranged $48.6 million in financing for Phoenix-based retail owner Westcor to refinance two community retail centers in Chandler, Ariz.

Mark McGovern and Jeff Rice of CBRE arranged the refinancing of the Chandler Festival, a 368,000-square-foot retail center, in addition to the Chandler Gateway, a 255,300-square-foot center.

CB Richard Ellis made the financing announcement Oct. 21.

Send real estate, construction, design and urban planning news to Michelle Mowad at mmowad@sdbj.com. She may also be reached at 858-277-6359, ext. 3109.


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