Developable Land Running Low

SAN DIEGO-While Downtown’s renaissance is booming and infill development is reaching record levels, land available in the metro area for development is reaching critically low numbers. A report by Burnham Real Estate revealed that land for development is at a critical level, with particular shortages in the mid-county submarkets. “Of just 935 acres of land for future development, 20% is already controlled by users,” says Mike Philbin, senior vice president with Burnham Real Estate. “This leaves just under 725 acres for speculative development–far below demand.” Philbin says that during the last “up” cycle (1996-2001) roughly 1,680 acres were absorbed with development. “This means that mid-county can only accommodate one more growth cycle,” says Philbin. “This next up cycle will force new development to northern and southern areas of the county.”One such chunk of land has been identified in Oceanside where Stone/Kruer Group, DWO Enterprises and Guthrie Development Co. have acquired 124 acres of land. The group has formed Pacific Coast Business Park LLC and will develop the $100-million Pacific Coast Business Park, according to Brett W. Anderson, project manager of Guthrie Development. The business park will count more than 1.5 million sf at build-out. The initial phase of vertical development of the project will include for-sale and for-lease buildings ranging from 3,000 sf to 50,000 sf and a multi-tenant park with for-lease spaces ranging from 1,500 sf to 3,000 sf.But other pieces of large, contiguous parcels in the Greater San Diego area are limited. As for the mid-county area, there are only five spec parcels in the 10-acre to 20-acre range, according to the Burnham report, and there are only six parcels that are larger than 20 acres. With land rapidly decreasing, prices are being driven up. The Otay Mesa and Carlsbad markets have both seen significant rates hikes with prices for land topping $10/sf in Otay Mesa and falling between $18/sf and $22/sf in Carlsbad. As a result, high land prices are making industrial product obsolete as the product types’ rental rates can’t match high land prices, according to the Burnham report.