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Wednesday, Jul 24, 2024
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Q2 Data Suggests Continued Gains for Two Key Markets

The San Diego Business Journal in August will have its next quarterly special report examining the region’s commercial real estate trends in depth. But the first official brokerage company data trickling in for 2017’s second quarter suggests that conditions favoring landlords still reign in the office and industrial categories.

As they have for the past several quarters, offices rents regionwide were still heading up at the year’s midpoint, as vacancy rates dropped from a year ago. Cushman & Wakefield put the countywide average monthly rent at $2.93 per square foot at the end of the second quarter, up from $2.79 for the same period of 2016.

One result is that the countywide office vacancy rate is now lower — 11.8 percent, compared with 13.3 percent a year ago, according to Cushman. This is happening as potential tenants are actually scouting the market for less total square footage than a year ago — 3.2 million square feet currently, compared with 4.2 million square feet at the midpoint of 2016.

In the industrial category, Colliers International Group Inc. reported a historically low regional vacancy rate, at 4.8 percent, and it projects that tightening to continue through the end of the year. This is despite the fact that there are 598,583 square feet of projects now under construction, nearly half of which will be completed by year’s end, with the remainder during 2018.

In both categories, brokers cite factors including continued job growth, steady demand for space, and construction rates that are still not high enough to create glut conditions in the local market.

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