The Housing Chronicles Blog: San Diego Economic Forecast Conference - Commercial Real Estate

Friday, October 5, 2012

San Diego Economic Forecast Conference - Commercial Real Estate

If you missed the recent San Diego Economic Forecast Conference produced by Beacon Economics, fear not!  As part of its ongoing association with these economists, MetroIntelligence authored the commercial real estate section for the conference book given out to attendees at this event, which took place on October 3rd at the Hilton San Diego Bayfront Hotel.

Following are some of the key findings:
  • The San Diego office market, after having seen its last trough in the fourth quarter of 2012, should continue to see slow improvement, with vacancies falling to nearly 16% and effective rents growing by 1.3% in 2012 and by 2.1% in 2013.
  • Although retail rents are somewhat stagnant, occupancy levels remain stable, and the retail market has seen a return to positive absorption levels; look for retail vacancy rates to end the year at 6.1%, while asking rents grow by 1.3% to 1.7% this year and next.
  • In keeping with last year’s cautious optimism, 2012 seems to be the year in which the county’s industrial sector began its recovery; look for industrial vacancies to fall to 8.6% for all of 2012 and to 8.1% in 2013, while asking rent growth rebounds to 1.3% this year and more than doubles to 3% for 2013.
  • Rather than investing in new supply, many building owners are building additions or making alterations to existing properties; permit activity for new development declined for both the retail and industrial sectors. In contrast, office properties in San Diego experienced strong growth in permit activity for new development.
  • With interest rates for 10-year U.S. Treasury bonds recently trending down below 1.70%, current cap rates for commercial property sectors look competitive by comparison, ranging from just over 3% for retail properties to around 7% for the office sector.   
Click here to download this commercial real estate section for free.

Click here to find out more about the consulting services offered by MetroIntelligence Real Estate & Economics Advisors.  Or just give us a call at 818.584.1848.

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