900,000-SF Net Absorption Drives Industrial Market

SAN DIEGO-It’s been a solid first quarter for the metro area’s industrial sector. In a recent report, Burnham Real Estate revealed that 915,000 sf of net absorption has already taken place. Those numbers put net absorption well ahead of least year’s total of 1.3 million sf.According to Chris Holder, vice president with Burnham Real Estate, both industrial as well as R&D space are showing increased activity. Holder says R&D space has experienced 207,000 sf of net absorption during the first quarter, its best quarterly numbers since 2000.”Both sectors are reporting stronger momentum, with industrial/warehouse space clearly at the forefront,” Holder says. “Industrial vacancy stands at 9.6% based on total leasable inventory, and R&D vacancy is also declining, currently hovering at 14.1%.” The Southern and Northern pockets of the county are the biggest beneficiaries, with demand strongest there, according to James Duncan, a senior associate with Burnham. “The limited supply and high cost of land in most of the popular mid-city and mid-county markets, makes industrial development far more feasible in areas like Otay Mesa, San Marcos and Oceanside.”As for new development, Otay Mesa leads the way with 648,100 sf under construction. Two of the bigger projects are One Piper Ranch and Opus Crossing, with the single largest facility being a 248,116-sf facility in Siempre Business Park. The project is 50% preleased by Reef.”The entire South County region is showing improved leasing activity,” Holder says. “Chula Vista recorded 229,661 sf of net absorption in the first quarter, activity that was accounted for by the purchase of the L Street Industrial Center by Sweetwater Union High School.”One other area seeing increasing activity is along the I-15 corridor. Poway alone scored 130,000 sf of net absorption during the quarter. “This activity was due to a high level of multi-tenant activity, which helped remove available space from the market in several projects,” Duncan says. “Vacancy in Poway stands at 9.6% on total competitive inventory, and at just 6.9 % based when owner-user facilities are included.”