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SAN DIEGO-The retail market has seen steady gains in rent growth and investment activity in the first half of 2005, with activity expected to remain strong the rest of the year, according to a report released by Grubb & Ellis/BRE Commercial. Positive population and job growth along with strong consumer confidence are cited for the healthy news.The overall vacancy rate for the county was down 2.7% from 2004 to 2.1%, resulting in a hike in rental rates. The report states that the highest retail rents were in Del Mar Heights, at $5/sf. Unanchored strip centers saw the highest vacancy rates at 3.9%.There was positive net absorption, with 205,000 sf absorbed in the first half. Demand for prime space shortened the vacancy time for locations to one to two months, compared with the typical six to eight month period. "Where the vacancy is still low, we usually get two or three types of services vying for the same space. That goes for large and small tenants," George Gramm, Grubb & Ellis/BRE's market research director tells Globest.comA wave of new tenants trying to get in on the San Diego market combined with a lack of available space contributed to high levels of activity throughout the county. Most of the 1.3 million sf of available space was in older and less desirable areas of the city, though two million sf of new retail construction is in the works.The addition of Petco Park to Downtown is attributed too much of the development activity, the most prevalent of which was mixed-use property. There are currently six mixed-use retail developments underway in downtown, which when complete, will add an additional 184,000 sf to the area. The Chula Vista/Bonita area topped out with the most new construction with 248,686 sf currently under development. "The outlying markets that actually have land available will continue to see new construction," Gramm says. "The core areas and downtown will see redevelopment and mixed-use and it will be built on demand."