Industrial Getting Its Mojo Back
San Diego industrial is firmly on track to lower vacancies and higher rents, Saywitz Co VP Jeff Saywitz, in the San Diego office, tells us. Here’s why.
1) Leasing velocity’s on the up.
As the economy grows, companies can make longer-term decisions for their business, and leasing activity will continue to increase at a steady pace, Jeff says. Also, once tenants believe that the real estate trough is behind them, they'll be more willing to go after that vacant space now. The market's going to be characterized in some instances by multiple suitors for space, and that'll drive velocity, too, he says. (It'll also give spaces really big egos, just like in high school.) Recently Jeff repped Priority Cargo Expeditors in a 17k SF lease at 2155 Paseo de Las Americas in Otay Mesa.
2) Concessions are dropping.
As demand rises and supply drops, the market will continue to see concessions decrease before rents increase much. In some instances, rents increase in conjunction with diminished concessions, Jeff says, but on the whole the pattern of fewer concessions before rising rents is pretty persistent, and it's happening now.
3) It's seeing a mix of demand drivers.
Some industries are growing faster than others, Jeff says, and naturally they tend to have a greater appetite for industrial (as long as it doesn't spoil their dinner). Such as the mortgage and banking industry, health care, and aerospace and high tech. The need for specialized R&D space and lab space in greater San Diego is fairly intense even now, but there isn’t nearly enough of it.
