THE average asking rental rate soared to an all-time high in the first quarter, a strong indicator of the highly competitive nature of the San Diego industrial market, even amidst the pandemic. Logistics inventory has been a main driver of rent growth, with rents growing 6% year-over-year.
DEMAND in the market remained strong in the first quarter. Amazon continues to be one of the most active companies in the market, taking over 4M SF of space since 2019 across the county for both distribution and last-mile facilities.
INVESTORS remain bullish, focusing on the region’s life science campuses and logistics inventory. Many owner/user sales are experiencing record high prices of $275-$300/ft for smaller buildings. Prices are increasing as land is scarce in San Diego and with the strong market fundamentals and dynamics, there are no signs of activity slowing down.
SAN DIEGO’S reputation as a top life science and tech market is firmly established, and also includes increased traction of logistics demand throughout the county. These two leading sectors will help the industrial market remain steady in an unstable economic environment during the pandemic.
THE San Diego County unemployment rate in February dropped eight basis points to 7.2% month-over-month. This compares with an unadjusted unemployment rate of 8.4% for California and 6.6% for the nation.
VACANCIES may increase slightly due to the new supply in 2021 but there will continue to be robust demand. Buildings in the 50K-100K SF range will see a large share of the activity in the next quarters, as many of the larger blocks of spaces were leased last year.
ASland prices are posting at record highs in the nearby Los Angeles market, investors and owners may see opportunity for lower priced investments in the highly dynamic San Diego market.