SECOND QUARTER 2015 San Diego Office Market Report energy came from solar in 2014, leading the rest...
Transcript of SECOND QUARTER 2015 San Diego Office Market Report energy came from solar in 2014, leading the rest...
Partnership. Performance.
SECOND QUARTER 2015
San Diego Office Market Report
Avison Young - San Diego 4225 Executive Square, Suite 600La Jolla, CA 92037858.201.7070
www.avisonyoung.com
Vacancy Rates
Net Absorption
Partnership. Performance.
SECOND QUARTER 2015
Market Overview
San Diego Office Market Report
Market Snapshot Asking Rent
* The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
San Diego Office Vacancy Tightens As Rents Continue To Climb
San Diego’s office market is moving forward with confidence, supported by its diverse industries and desirable geography. The region is a thriving hub for biotechnology, telecommunications and tourism, which have contributed to the resilience of the market since the Great Recession. There is strong demand for space from health care innovators, independent research institutes and sectors that work closely with the local military. The unemployment rate for San Diego County, as of June 2015, dropped to 5.0%. Year-to-date, unemployment levels are markedly lower in comparison with the previous year.
The San Diego County office vacancy rate dropped to 10.7% at mid-year 2015, tightening significantly from 12.3% at mid-year 2014. Rental rates are responding to this movement and, by the end of the second quarter of 2015, the average asking rental rate for all classes reached $2.45 psf full-service gross (FSG), up from $2.32 psf FSG one year earlier. Rents are experiencing a quarter-over-quarter increase across every major submarket in the county. The highest rents, by far, are found in the Central Coast area, at $3.01 psf FSG. The North County Coastal area and the Downtown area achieved the next highest rents, while the Central Cities experienced the greatest gain over the previous year. Total net absorption for the12-month period ending at mid-year 2015 was nearly 1.9 msf.
The San Diego office market had six investment-grade office properties under construction at the mid-point of 2015. These projects amount to more than 635,000 sf of new inventory, approximately 89% of which will be available to the market with the remainder preleased. The Downtown market saw the completion of a 320,000-sf, LEED Gold certified office tower, which is fully occupied by Sempra Energy. There is currently more than 8 msf of proposed office development on record in the county. A gradual increase in new construction is expected to continue through 2015 and well into 2016.
Second Quarter 2015 | San Diego Office Report
M A J O R L E A S E T R A N S A C T I O N S
M A J O R S A L E T R A N S A C T I O N S
Of the 8.0m sf of proposed office space being marketed in San Diego, 23% of the volume is located in Sorrento Mesa, 11% is located in Scripps Ranch, and 13% is located Downtown.
The population in San Diego County is experiencing a faster growth rate than that of the state as a whole, expanding 5.4% over the past four years. There are approximately 3,263,431 people living in San Diego County as of 2014.
* The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
U N D E R C O N S T R U C T I O N
In 2015 San Diego ranks 17th among the top U.S. cities for the number of Energy Star rated buildings. Over 46 million sf. in 467 facilities, have achievd Energy Star labels in the county of San Diego.
More than 5% of California's utility-scale energy came from solar in 2014, leading the rest of the country. San Diego ranks 2nd (behind Los Angeles) among U.S. cities for volume of rooftop solar panels.
S a n D i e g o R e g i o n s B y T h e N u m b e r s
Second Quarter 2015 | San Diego Office Report
* The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
Second Quarter 2015 | San Diego Office Report
* The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
Second Quarter 2015 | San Diego Office Report
G e o g r a p h i c C o v e r a g e
East County College AreaMission Gorge
El CajonLa MesaSantee
Lemon Grove
Downtown Business District Downtown San Diego
Central San Diego Old Town/Sports Arena/Point Loma Mission Valley North Park/South ParkBankers Hill/Hillcrest/Mission Hills Pacific Beach/Rose Canyon/Morena Kearny Mesa
South Bay CoronadoImperial Beach Chula Vista National CityOtay MesaSoutheast San Diego
Central Coast Sorrento ValleyDel Mar Heights/Carmel ValleySorrento MesaLa JollaTorrey PinesUTCGovernor Park
North County Inland EscondidoRancho Bernardo PowayMira Mesa/Miramar Scripps Ranch
North County Coastal OceansideCarlsbadVista San Marcos EncinitasSolana Beach Del MarRancho Santa Fe
N County Inland
N County Coastal
East County
South Bay
Central City
Central Coast
Downtown
San Diego County: Improving
U n e m p l o y m e n t R a t e s
United States: Improving
June 2015 5.3%
June 2014 6.3%
June 2015 5.0%
June 2014 6.1%
California: Improving
June 2015 6.3%
June 2014 7.6%
WASHINGTON, DC
RALEIGH-DURHAM (2)
SUBURBAN MARYLAND
HALIFAX
NEW YORK CITY
ORANGE COUNTY DALLAS
HOUSTON
ATLANTA
WEST PALM BEACH (2)
BOSTON
PITTSBURGH
OTTAWA
DETRO
IT CHICAGO (2)
GUELPH
MISSISSAUGA
MONTREALEDMONTON
REGINAWINNIPEG
CALGARYVANCOUVER
LETHBRIDGE
DENVER
RENO
LAS VEGAS
SAN FRANCISCO
LOS ANGELES (4)
NEW JERSEY
TYSONS CORNER, VA
SOUTH CAROLINA (2)
TORONTO (2)
QUEBEC CITY
TORONTO NORTH
CHARLOTTE
SAN DIEGO
SACRAMENTO
SAN MATEO
FAIRFIELD/WESTCHESTER
LONG ISLAND
PHILADELPHIA
TAMPA
COLUMBUS
AUSTIN
OAKLAND
CLEVELAND
ORLANDO
MONCTON
FORT LAUDERDALE
MIAMI
MINNEAPOLIS
INDIANAPOLIS
LONDON
THAMES VALLEY
FRANKFURT
MUNICH
DUESSELDORF
HAMBURG
Avison Young at a Glance
Contact Information - Southern California, United States
213.935.7430 323.851.6666
www.avisonyoung.com
310.899.1800424.257.6474
Los Angeles - Downtown 555 S Flower St, Ste 3200Los Angeles, CA 90071 Primary Contact: Ted [email protected]
Los Angeles - North6711 Forest Lawn DrLos Angeles, CA 90068 Primary Contact: Mark Evanoff [email protected]
Los Angeles - West10940 Wilshire Blvd, Ste 2100 Los Angeles, CA 90024 Primary Contact: Jonathan Larsen [email protected]
Los Angeles - Santa Monica 301 Arizona Ave, Ste 303 Santa Monica, CA 90401 Primary Contact: Randy [email protected]
San Diego - La Jolla4225 Executive Sq, Ste 600 La Jolla, CA 92037Primary Contact: Jerry Keeney [email protected]
858.201.7070
Orange County - Irvine 2030 Main Street, Ste 150 Irvine, CA 92614Primary Contact: Dan [email protected]
949.757.1190 [email protected]
Report Prepared By:Amber Jagers - Research Manager 4225 Executive Sq, Ste 600La Jolla, CA 92037
Regional Managing Director: Chris Cooper - Corporate 555 S Flower St, Ste 3200 Los Angeles, CA 90071
© 2015, Avison Young (Canada) Inc. The statistics contained in this report were obtained from sources deemed reliable, including Avison Young, Bureau of Labor Statistics, CoStar Group Inc., Real Capital Analytics, Inc., Reis Services, LLC, State of CA Employment Development Department, U.S. Green Building Council. However, Avison Young (Canada) Inc. does not guarantee the accuracy or completeness of the information presented, nor does it assume any responsibility or liability for any errors or omissions. All opinions expressed and data provided herein are subject to change without notice. This report cannot be reproduced in part or in full in any format without the prior written consent of Avison Young (Canada) Inc.
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