DEMAND in the industrial market in 2021 was aggressive across all sectors, from life science companies to logistics and last-mile distribution centers. Vacancies and availabilities hit all-time lows, dropping over 35% year-over-year.
AFTER 2Q 2021 reached a 15-year high in leasing volume, the second half of 2021 fell short YOY. The decrease in activity is not due to a lack of interest but due to the tight market and shortage of availability across the county.
SALES VOLUME REACHED an all-time historic high in 2021, posting approximately $1.8B in 4Q 2021 alone, a number the market has not ever experienced. Available inventory is still roughly 25% below what it was in 2020, furthering the upward pressure on sales prices. Although buyers are receiving close to no discount on asking prices, owner/users and investors remain bullish.
ON THE STRENGTH of 15,000 new jobs in the county, the San Diego unemployment rate in November dropped to a pandemic low of 4.6%, down seven basis points from 5.3% month-over-month. This compares with an unadjusted unemployment rate of 5.4% for California and 3.9% for the nation. Driving the majority of the job additions in the county were retail trade with notable advancements in general merchandise stores (up 2,200) and clothing stores (up 1,600).
E-COMMERCE AND ONLINE RETAIL are expected to have record years, reflecting in the employment gains in transportation and warehousing. Additionally, the thriving life sciences sector is driving growth of high-paying, quality jobs that have a significant effect on the rest of the local economy, as every job in R&D supports additional jobs in supportive industries.
AS SUPPLY PRESSURE is not evident in the near term, and vacancies and availabilities across the county hit historic lows in 2021, more developers will likely break ground in the coming year to meet the surging demand of life science, e-commerce, and logistics tenants.
DESPITE brick-and-mortar establishments remaining open this year, novel variants of the COVID-19 virus remain a concern, creating reluctancy to return to shopping in person. As such, e-commerce continues a rapid upward trajectory creating massive demand for space throughout the county.
SOURCE: COSTAR, EDD, SD BUSINESS JOURNAL
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