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Strong Market Predicted for Central Warehouse Properties

CB Richard Ellis released its 2007 Warehouse/Distribution Overview of the Central San Diego market March 3, predicting a strong market for 2008 and beyond. The Central San Diego market consists of approximately 15.3 million square feet in Kearny Mesa, Mission Gorge, Miramar, Poway, Rancho Bernardo, Sorrento Mesa and Sorrento Valley.

The report provided by Rob Merkin, senior vice president of CB Richard Ellis, said a quickly diminishing supply of land and prices will continue to create a significant barrier of entry for future warehouse properties in Central San Diego. It continued to state that there is a greater likelihood that existing warehouse space will be converted to higher and better uses, which will result in a decreased supply.

CBRE data indicates there was 818,000 square feet of warehouse and distribution space available in these markets at year end, of which 489,000 square feet were vacant. These statistics translate into a 5.3 percent availability factor and 3.2 percent vacancy rate. The vacancy rate increased 7 percent in 2007 from 3 percent in 2006. Availability decreased 21 percent, from 6.4 percent in 2006 to 5.3 percent in 2007.

During 2007, the Central San Diego warehouse/distribution market recorded 975,000 square feet of gross absorption and 104,000 square feet of net absorption.

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Ultimately, CBRE reported that while it expects the slowing economy to continue to impact demand, warehouse/distribution space should fare better than other product types because it is considered the most cost-effective space available in the marketplace. However, it notes that several factors must be monitored closely, including that rental rates in San Diego continue to be high compared with other lower cost markets such as Los Angeles and Inland Empire.

Last year, 17 warehouse/distribution properties sold in this market, according to CBRE. These properties totaled more than 2.1 million square feet with a total value exceeding $325 million, equating to an average price per square foot of $153.

Notable sales include 4000 Ruffin Road in Kearny Mesa and Miramar Commerce Park on Miramar Road in San Diego.

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Hiring Executives:

Real estate and money management services firm Jones Lang LaSalle welcomed Poe Corn as executive vice president to lead its new national capital markets service offering from its San Diego office. Corn will assist health care providers in developing and executing real estate capital strategies designed to achieve occupancy and financial management objectives.

In addition to Corn, health care specialists Kevin Roy and Drew Auker-Lincourt have also joined Jones Lang LaSalle. The three have teamed up with Kenneth Rudy, managing director of Jones Lang LaSalle’s corporate capital markets group and Don Hamilton, managing director of its national health care practice.

Rudy said Corn is among the most respected market leaders in optimizing the value of single-asset and portfolio real estate opportunities for health care providers.

Corn is a member of several chambers of commerce and serves on the board of directors of multiple professional and philanthropic organizations.

In the past two years, Roy completed more than 50 transactions totaling more than 450,000 square feet of space and $75 million in consideration.

Auker-Lincourt formerly served as a business development analyst and coordinated transactions exceeding $200 million in consideration. In addition, he has five years of experience in construction management and finance.

Jones Lang LaSalle now has 11 brokers in its San Diego office. In December, Jones Lang LaSalle welcomed Lynn LaChapelle, former senior vice president of Burnham Real Estate, and Robert Prendergast, former director of Burnham’s capital markets investment group, to its real estate and money management firm. Burnham has since been bought out by Cushman & Wakefield Inc. real estate services firm.

Jones Lang LaSalle has offices in 170 offices worldwide and operates in more than 700 cities in 60-plus countries.


Send real estate news to Michelle Mowad at

mmowad@sdbj.com

. She may also be reached at (858) 277-6359, ext. 3109.

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