Rental rates for office and industrial property in San Diego County have risen above the peak set just prior to the Great Recession, according to JLL, a commercial real estate firm.
The firm attributed the rising rates to an historical low unemployment rate of 3.2 percent, “robust venture capital funding,” redevelopment of older office buildings, what it said were “record high transaction volume and little new construction done on speculation.
“These positive market principals during 2018 led to a 9.6 percent year-over-year increase of average asking rents, as well as surpassing the last cycle’s peak by 8.4 percent,” JLL reported.
By the end of 2018, the average office rent sought by landlords was $2.98 per square foot.
The previous record — set in 2007 — was $2.75 per square foot, according to JLL.
Similarly, JLL reported that industrial rents for low finish buildings have topped the previous peak set in 2007 by 27.6 percent.
Record new inventory, a stable vacancy rate and high demand for industrial property fueled the rise.
By the end of 2018, the asking rent sought by industrial property owners reached 97 cents per square foot for low finish space, up from the previous peak of 76 cents, according to JLL.
“Locally and nationally, industrial product has been the darling of commercial real estate in this cycle,” JLL said, attributing the attraction in general to e-commerce, a growing demand for delivery services with a growth in craft breweries, defense and life sciences adding to the mix in San Diego County.