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New Reports Cites Improving Industrial Market

SAN DIEGO-The county's net absorption of industrial space is expected to reach 2.7 million sf by year-end, according to recently published research by Burnham Real Estate. This figure reflects a 23% increase from 2003 and a return to the levels of net absorption recorded in 2002.

By Erin Cassin | Updated on May 18, 2004

SAN DIEGO-San Diego County’s industrial market continues to show signs of improvement, with a new report on the region predicting 2.7 million sf of net absorption in the industrial sector by year-end. This figure reflects a 23% increase from 2003 and a return to the levels of net absorption recorded in 2002. The report, published by Burnham Real Estate, points out the county has already recorded 500,000 sf of net absorption for the first quarter of 2004, with a portion of this positive activity attributable to the completion of several build-to-suit projects here over the first several months of the year. Additional build-to-suit facilities are currently under way, such as the Biogen Idec and Ashworth projects that are rising in Oceanside. In addition to build-to-suit development, speculative projects have begun to spring up around the county. “Currently, spec development accounts for 56.6% of the 1.8 million sf of new space under way,” says Jed Stirnkorb, a senior vice president and industrial market specialist with Burnham. It is the area’s tight vacancy rates that are one of the driving forces spurring on the construction of speculative industrial properties, as the Burnham report points out. “Industrial supply and demand are in balance, and as a result, vacancy remains virtually unchanged-–standing at 8.2% based upon total leasable inventory and at just 5.7% when owner-occupied buildings are included,” Stirnkorb notes. A sizable amount of the leasing activity has occurred along the Highway 78 Corridor, with Vista reporting 87,810 sf of net absorption; Oceanside with 60,259 sf; and San Marcos with 34,296 sf.

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