San Diego Economic Forecast Conference - Commercial Real Estate

As part of its ongoing association with Beacon Economics, MetroIntelligence authored the commercial real estate section for the recent San Diego Economic Forecast Conference, which took place on September 20th at the Hilton San Diego Bayfront Hotel.

If you'd like to read the section in its entirety, as a service to current and potential clients, we've made it available for free on our Web site (a $175 value). So next time you have consulting needs, please be sure to contact us to discuss how we can help. Don't be shy!

Please also register on our Web site to keep updated on future reports and presentations.

Click here to download the report.

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Here were some of the major findings from our report:

• Having reached a cyclical trough in the second quarter of 2011, the San Diego office market should slowly begin to improve, with vacancies falling below 17% and rent growth squeaking out a small gain of nearly 1% by the end of the year.
• With the county’s retail market finally on the rebound by the second quarter of 2011, look for economic vacancies to fall by 80 basis points to 8.4% by the end of 2011 as rent growth rises by just over 1.5%.
• Because San Diego’s industrial/warehouse market is so closely intertwined to the local economy, its rebound will likely trail those of the office and retail sectors, with vacancies not falling below 12% until the third quarter of 2011 and rent growth remaining under 5% per quarter until the end of 2012.
• Based on commercial building permit values, many building owners are investing in additions or alterations to existing properties; for new development, the strongest rebound in the second quarter of 2011 was for future office properties, followed by sporadic growth in the retail sector and declines for new industrial properties.
• With interest rates for 10-year U.S. Treasury bonds recently trending down towards 2%, cap rates during the second quarter of 2011 for all commercial property sectors look quite competitive by comparison, ranging from 6.4% for industrial/warehouse properties to about 7.8% for the office and retail sectors.