Closed Industrial Construction Pipeline Is a Plus

SAN DIEGO-San Diego’s industrial market, an area made up nearly 160 million square feet of product in 26 distinct submarkets, is divided almost equally among Warehouse/Distribution, Manufacturing, and Flex/R&D properties. Manufacturing and Distribution projects, which have hovered around 10% vacant  in past years, are outperforming Flex/R&D buildings, which posted 16% vacancy in the fourth quarter of 2011 after a dramatic climb after the onset of the recession, says Jay Alexander, managing director of Jones Lang LaSalle.

Like the office market, Alexander says that the industrial construction pipeline is closed which will help accelerate the region’s post-recession recovery. “With land and construction costs high, once demand returns developers will fall back on more profitable building types like R&D/Flex and corporate headquarters facilities in lieu of traditional warehouse or manufacturing projects, especially given the surge of demand in the life sciences and technology industries,” he says.