Alsadek: The decrease in construction is partly because we don't have a lot of land left, but in San Francisco, Seattle and L.A., there's millions of square feet of construction. That's what attracts investors to San Diego. We don't have the large projects like in other markets. We're on a different scale, but investors are happy to be in San Diego.

GlobeSt.com: What advice would you give to CRE investors in this market?

Alsadek: I think our office market is going to continue to see tenant demand, low vacancy and appreciation in rent and values over the next couple of years, and there's no reason to see anything different in the market. San Diego is very diversified right now compared to decades ago, and we're seeing a lot of growth from different industries. What will help the market grow faster than people are forecasting is that San Diego is still a good option for growth sectors like technology and healthcare—and we have better housing prices than other markets on the West Coast, and rents are a lot cheaper than Seattle or San Francisco. We have the very well-educated engineers and middle-level management that all these companies are seeking. Google just opened an office in San Diego, Amazon is looking to open an office in San Diego, and if these companies get the results we all know about our market—hiring quality employees and lower occupancy costs—they will continue want to grow in our market.

GlobeSt.com: What else should our readers know about your report?

Alsadek: Last year, we had more transactions with owner/users buying buildings, and a big chunk of that was UCSD buying Torrey Pines Court in Torrey Pines and the campus they occupied half of in Governor Park.

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SAN DIEGO—Compared to other West Coast markets, San Diego offers lower cost of living and rental rates and is beginning to attract well-known companies, but still struggles to find land for development of larger projects, CBRE EVP Louay Alsadek tells GlobeSt.com. The firm's research department recently released a trends report on San Diego capital markets, so we chatted with Alsadek about the report's findings and how San Diego's capital markets stacks up to other Southwest markets.

GlobeSt.com: How would you summarize your firm's overall findings about San Diego's capital markets?

Alsadek: Our volume has dropped just like a majority of the markets on the West Coast and in other parts of the US. It's a combination of factors. In San Diego, fewer transactions happen in general, but we also didn't have as many large transactions in 2016 as we had in 2015. There are always bigger deals that don't happen San Diego. The stats on the percentage are mostly on dollar amount, but there are generally fewer deals and less dollar amount, plus market activity is less than before.

One of the reasons for decreased activity was that there was a little uncertainty at the beginning of the year on interest rates because it was an election year. I think a lot of our investors were concerned about the market fundamentals because we've been in a sort of rebound over the last eight or nine years. What has happened is our market here in San Diego is very resilient—our vacancy continued to drop, our leasing activity is still very strong and tenant demand is strong. What really helps us in San Diego is in central part of the county, we're very restricted in land availability. If you compare us to other markets on the West Coast for office, we only had in the low 400,000 square feet for office construction, which is nothing compared to what we saw in late '90s and early 2000s. GlobeSt.com: How do they stack up against other markets in the Southwest?

Alsadek: The decrease in construction is partly because we don't have a lot of land left, but in San Francisco, Seattle and L.A., there's millions of square feet of construction. That's what attracts investors to San Diego. We don't have the large projects like in other markets. We're on a different scale, but investors are happy to be in San Diego.

GlobeSt.com: What advice would you give to CRE investors in this market?

Alsadek: I think our office market is going to continue to see tenant demand, low vacancy and appreciation in rent and values over the next couple of years, and there's no reason to see anything different in the market. San Diego is very diversified right now compared to decades ago, and we're seeing a lot of growth from different industries. What will help the market grow faster than people are forecasting is that San Diego is still a good option for growth sectors like technology and healthcare—and we have better housing prices than other markets on the West Coast, and rents are a lot cheaper than Seattle or San Francisco. We have the very well-educated engineers and middle-level management that all these companies are seeking. Google just opened an office in San Diego, Amazon is looking to open an office in San Diego, and if these companies get the results we all know about our market—hiring quality employees and lower occupancy costs—they will continue want to grow in our market.

GlobeSt.com: What else should our readers know about your report?

Alsadek: Last year, we had more transactions with owner/users buying buildings, and a big chunk of that was UCSD buying Torrey Pines Court in Torrey Pines and the campus they occupied half of in Governor Park.