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.

San Diego Economic Forecast Conference - Residential Real Estate

As part of its ongoing association with Beacon Economics, MetroIntelligence authored the residential real estate section for the recent San Diego Economic Forecast Conference, which took place on September 20th at the Hilton San Diego Bayfront Hotel.

If you'd like to read the section in its entirety, as a service to current and potential clients, we've made it available for free on our Web site (a $175 value). So next time you have consulting needs, please be sure to contact us to discuss how we can help. Don't be shy!

Please also register on our Web site to keep updated on future reports and presentations.

Click here to download the report.

Click here if you'd like to register for updates.

Here were some of the major findings from our report:

• Falling home prices in San Diego County have made them much more affordable, with 52% of households able to buy the median-priced home at current interest rates, up exponentially from the mid-single digits noted from the last half of 2004 through the end of 2006.
• While tax credit programs did help the S&P/Case-Shiller Index to recover some of the losses in home prices noted between 2006 and 2009, since their expiration the index has been slowly declining, hovering close to levels last noted in the last quarter of 2009.
• Although slowly recovering, new home sales remain quite depressed as they continue to compete with discounted foreclosures and short sales, with prices softening to $447,166 following the expiration of the tax credit programs of 2009 and 2010.
• While sales of existing homes are still down by 45% from their 2003 peak, over the last 18 months they’ve continued to range from 5,500 to 5,900 homes per quarter; prices are up by about 11% from the lows of early 2009 but have softened in recent months to about $360,000.
• After staging a minor rebound in early 2008, sales of condominiums have again softened to about 2,600 sales per quarter as first-time buyers look instead for single-family bargains; after falling by nearly 50% since the 2006 peak, prices have rebounded moderately but continue to range from $210,000 to $225,000.
• After several years of struggle, the local apartment market is definitely on the mend, with vacancy rates slowly trending down towards 5.0% as quarterly rent hikes have bounced back into positive territory and are projected to continue rising by 0.7% to 1.0% per quarter.
• Both default and foreclosure activity is trending downwards, with defaults – often the precursor to a foreclosure – at the lowest levels seen since early 2007.
• After experiencing considerable declines, building permits are slowly rebounding. Most of the single-family activity is taking place in the outlying areas of South Bay and North County, whereas most of the multi-family activity has been noted in the City of San Diego, Escondido and Chula Vista.

San Diego Economic Forecast Conference - Commercial Real Estate

As part of its ongoing association with Beacon Economics, MetroIntelligence authored the commercial real estate section for the recent San Diego Economic Forecast Conference, which took place on September 20th at the Hilton San Diego Bayfront Hotel.

If you'd like to read the section in its entirety, as a service to current and potential clients, we've made it available for free on our Web site (a $175 value). So next time you have consulting needs, please be sure to contact us to discuss how we can help. Don't be shy!

Please also register on our Web site to keep updated on future reports and presentations.

Click here to download the report.

Click here if you'd like to register for updates.

Here were some of the major findings from our report:

• Having reached a cyclical trough in the second quarter of 2011, the San Diego office market should slowly begin to improve, with vacancies falling below 17% and rent growth squeaking out a small gain of nearly 1% by the end of the year.
• With the county’s retail market finally on the rebound by the second quarter of 2011, look for economic vacancies to fall by 80 basis points to 8.4% by the end of 2011 as rent growth rises by just over 1.5%.
• Because San Diego’s industrial/warehouse market is so closely intertwined to the local economy, its rebound will likely trail those of the office and retail sectors, with vacancies not falling below 12% until the third quarter of 2011 and rent growth remaining under 5% per quarter until the end of 2012.
• Based on commercial building permit values, many building owners are investing in additions or alterations to existing properties; for new development, the strongest rebound in the second quarter of 2011 was for future office properties, followed by sporadic growth in the retail sector and declines for new industrial properties.
• With interest rates for 10-year U.S. Treasury bonds recently trending down towards 2%, cap rates during the second quarter of 2011 for all commercial property sectors look quite competitive by comparison, ranging from 6.4% for industrial/warehouse properties to about 7.8% for the office and retail sectors.

"The Recovery: Is it Real?" San Diego Conference materials now online

The materials provided for Beacon Economics' "The Recovery: Is it Real?" annual conference in San Diego on May 21st are now available online.

As part of our ongoing association with Beacon Economics, MetroIntelligence Real Estate Advisors Principal Patrick Duffy wrote the sections on residential and commercial real estate.

If you want to read just the section on residential real estate, click here to download.

If you want to read just the section on commercial real estate, click here to download.

And if you want to download the entire conference book, click here to download.

San Diego housing recovery expected to slow

San Diego Union-Tribune reporter Roger Showley covered Beacon Economics' lastest economic conference in San Diego on Friday, May 21st. In addition to the recent conference in Los Angeles, I also wrote the sections on residential and commercial real estate for this conference book, one of which was cited in Showley's piece:

"Office vacancies, currently about 19.3 percent, will fall only to 13 percent over the next four years as employment growth remains sluggish. Industry norms consider a healthy office vacancy rate to be less than 10 percent.

“Looking ahead to the rest of 2010 through 2012, the health of the office market will be largely tied to the extent of increased government spending on biotech and technology,” said Patrick S. Duffy of MetroIntelligence Real Estate Advisors, who wrote the chapter on commercial real estate in the Beacon report.

High vacancies will mean bargains for investors in some office buildings, he said, but values will still end up 36 percent below their peak of 2006."

Click here to read entire story.