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Industrial ReportNorth San Diego County
1st Quarter 2012
PREPARED BY:
Adam Molnar
Greg Lewis
Tucker Hohenstein
Mike Erwin
COLLIERS INTERNATIONAL
5901 Priestly Drive, Suite 100
Carlsbad, CA 92008
Fax 760 438 8925
www.colliers.com/carlsbad
NORTH COUNTYAT A GLANCE
www.colliers.com/carlsbad
MARKET INDICATORS
INDUSTRIAL/R&D VACANCY RATESQ1 2012
Q1 2012 | INDUSTRIAL
CARLSBAD HISTORICAL MARKET TRENDS
10.6%
8.1%
6.9%
15.5%
6.5%
14.4%
0% 5% 10% 15% 20%
North County
Vista
San Marcos
Oceanside
Escondido
Carlsbad
INDUSTRIAL/R&D VACANCY RATESQ1 2012
VISTA HISTORICAL MARKET TRENDS
OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS
Q12012
Q22012 (forecast)
VACANCY
NET ABSORPTION
CONSTRUCTION
RENTAL RATE
LEASE CONCESSIONS
Ocean
Escondido
Oceanside
Vista
San
MarcosCarlsbad
Submarket Buildings Total Inventory Vacant SF Vacancy Rate
Carlsbad 485 15,025,194 2,165,696 14.4%
Escondido 637 7,183,097 445,352 6.5%
Oceanside 396 8,038,265 1,246,094 15.5%
San Marcos 489 8,710,664 604,631 6.9%
Vista 530 13,374,822 1,081,203 8.1%
Total 2,537 52,333,280 5,566,778 10.6%
OVERVIEW
The North San Diego County industrial market is largely decentralized and comprised of
fi ve cities including Carlsbad, Escondido, Oceanside, San Marcos and Vista. Situated 35
miles north of downtown San Diego and 52 miles south of John Wayne Airport in Orange
County, the coastal location is a major factor in the area’s appeal to corporate users and
its 826,985 residents.
The industrial market consists of approximately 52.3 million square feet. By comparison,
the total San Diego industrial market is 188.3 million square feet. North County represents
27% of the total. For Q1 2012 North County vacancy was 10.6%. The vacancy rate
is decreasing as 172,000 SF of positive net absorption occurred. The following table
summarizes the inventory and vacancy by submarket:
North San Diego County is well known for its highly skilled labor force, excellent
transportation network, pro-growth business environment, signifi cant Federal
Government presence, desirable vacation destination including world class beaches,
resorts, golf venues, and abundant employee housing.
The North San Diego County industrial market is home to a diversifi ed mix of users
including defense, telecommunications, software, medical manufacturing, golf and leisure
Coca-Cola
Medtronic
Titleist Golf
ViaSat
Covidien
Abbott Labs
Genentech
Callaway Golf
L-3 Communications
SAIC
Isis Pharmaceuticals
Life Technologies
Cobra / Puma Golf
TaylorMade Golf
Denso Wireless
US Foods
Philips Respironics
Thomson Reuters
Rockwell Collins
John Deere
DJO, Inc.
Linear
Killion Industries
Jeld-Wen Windows and Doors
Sumitomo Electric
McCain, Inc.
Directed Electronics
GIA
Hunter Industries
Watkins Manufacturing
ESCONDIDO HISTORICAL MARKET TRENDS NORTH COUNTY NET ABSORPTION TRENDS
5-Yr. Avg. = 91,368 SF
0%
2%
4%
6%
8%
10%
12%
14%
-1,000
-500
0
500
1,000
1,500
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Q1
Vacancy R
ate
SF
(0
00
s)
Net Absorption New Supply Vacancy
NORTH COUNTY HISTORICAL MARKET TRENDS
ACTIVITY
Land appears to have reversed its downward
slide with the sale of 28 acres in Ocean
Ranch, Oceanside to US Foods for $11.50/
SF. To help put this price improvement in
perspective, a year earlier the same property
was purchased as a short-sale by a local
investor/developer for $7.23/SF. Supply of
industrial land, particularly large contiguous
sites in North County, is limited. It will not take
much in the way of demand to see further
increases in land prices.
The sale of several distressed properties
during Q1 pulled the median sale price down
to $76.50/SF. As distressed real estate is
cleared from the market look for sale prices
to gradually increase and good quality product to command a sizable premium over the Q1 median price. Many
“would be” sellers have chosen to lease rather than compete with distressed opportunities. This has resulted in
the supply of properties available for lease out numbering those for sale by a ratio of 6 to 1 in the 25,000-50,000
square foot range.
It was a positive sign to see investors, owner-occupiers and tenants active during Q1. Investors purchased
two vacant buildings located in Vista. Pacifi ca Enterprises bought 65,000 square feet 1081 Poinsettia for $58/
SF, while SR Commercial purchased 39,000 square feet at 2390 Oak Ridge for $69.57/SF. Owner occupiers
purchased four buildings for a total of 113,449 square feet with prices ranging between $65.78/SF and $127.90/
SF. Signifi cant tenant transactions included; La Cantina Doors leasing 67,000 square feet in Oceanside, PODS
renewing their lease of 64,000 square feet in Carlsbad, Astro Converters renewing their lease of 25,000 square
feet in San Marcos and Balboa Cal Inc. occupying 23,000 square feet in Vista.
FORECAST
There are several transactions underway at the end of Q1 that will likely help boost activity when they are
completed during Q2. Look for investors and tenants to lead the way, while owner-occupiers fi nd it diffi cult to
locate good quality properties or are reluctant to fi ll the price gap that has been created by recent distressed
sales. Lease rates will move sideways in the near term, but should begin to increase later in the year as vacancy
continues its slow decline. The current supply of spaces between 25,000-50,000 square feet for lease will force
landlords to complete aggressively for these tenants.
New speculative construction while being analyzed is still at least 24 months away. Filling the gap will be an
occasional build-to-suit if companies are unable to fi nd a desirable existing alternative.
AT A GLANCE | Q1 2012 | INDUSTRIAL | NORTH COUNTY
This document has been prepared by Colliers International for advertising and general information only. Colliers
International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding
the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party
should undertake their own inquiries as to the accuracy of the information. Colliers International excludes
unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes
all liability for loss and damages arising there from.
prepared by ADAM MOLNAR, GREG LEWIS
TUCKER HOHENSTEIN & MIKE ERWIN, 760 438 8950
www.colliers.com/carlsbad
OVERVIEW
This year is off to a slow start in Carlsbad with a meager 14,650 square feet of positive
absorption in 1Q 2012. The overall vacancy rate for Industrial/R&D product sits at 14.41%
with industrial product continuing to outperform R&D (12.51% and 16.17% respectively).
There is no new construction underway or in the planned stage.
ACTIVITY
The limited activity in the leasing market was mostly concentrated in the 10,000 to
20,000 square foot segment with companies like Scratch Media and Iris International
committing to space in Carlsbad. Renewals remain prevalent as current Landlords tend
to have a leg up on the competition due to prohibitive moving and Tenant Improvements
costs associated with a new location. Examples of this during 1Q 2012 are PODS who
renewed in 64,541 SF and Luxtera who downsized and renewed in 32,510 SF. There
were no signifi cant sales transactions in 1Q 2012 in Carlsbad.
FORECAST
Investment sales appear to be on the rebound in Carlsbad with multiple large Industrial/
R&D projects expected to trade hands in 2Q 2012. The remaining shortage of large
blocks of contiguous, functional space above 75,000 SF suggests that companies with
forward thinking and the desire to consolidate operations will continue to explore Build
to Suit options. Overall activity and demand in the market appear to be up and supply is
expected to diminish, meaning that Landlords should benefi t from a slight uptick in rental
rates with no new product in the pipeline.
MARKET INDICATORS
INDUSTRIAL/R&D VACANCY RATESQ1 2012
Q1 2012 | INDUSTRIAL
CARLSBAD HISTORICAL MARKET TRENDS
10.6%
8.1%
6.9%
15.5%
6.5%
14.4%
0% 5% 10% 15% 20%
North County
Vista
San Marcos
Oceanside
Escondido
Carlsbad
INDUSTRIAL/R&D VACANCY RATESQ1 2012
VISTA HISTORICAL MARKET TRENDS
OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS
0%
2%
4%
6%
8%
10%
12%
14%
16%
-100
0
100
200
300
400
500
600
700
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Q1
Vacancy R
ate
SF
(0
00
s)
Net Absorption New Supply Vacancy
CARLSBAD HISTORICAL MARKET TRENDSINDUSTRIAL/R&D VACANCY RATESQ1 2012
VISTA HISTORICAL MARKET TRENDS
OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS
Ocean
Oceanside
Vista
SanMarcosCarlsbad
Q12012
Q22012 (forecast)
VACANCY
NET ABSORPTION
CONSTRUCTION
RENTAL RATE
LEASE CONCESSIONS
CARLSBADAT A GLANCE
Carlsbad
# PROPERTY NAME/ADDRESS BUYER TYPE SIZE (SF) SALE PRICE PRICE/SF
There were no building sales larger than 15,000 SF during Q1
# PROPERTY NAME/ADDRESS TENANT NAME SIZE (SF) TERM EFF RATE/SF
1 3254 GreyHawk Court Scratch Media 12,835 48 months $0.91 MG
2 1891 Rutherford Road Iris International 20,000 84 months $1.53 NNN
3 2320 Camino Vida Roble Luxtera, Inc. (renewal) 32,510 43 months $0.98 NNN
4 2858 Loker Avenue PODS 64,541 84 months $0.70 NNN
SALES ACTIVITY
LEASING ACTIVITY
TRANSACTION ACTIVITY - Q1 2012
El C
amino R
eal
El C
amino R
eal
El C
amino R
eal
Gateway RdGateway Rd
Whiptail LoopWhiptail Loop
El Camino Real
Cannon Rd
Faraday Ave
Faraday Ave
College B
lvd
College B
lvd
Palom
ar A
irpo
rt R
d
Palom
ar A
irpo
rt R
d
Poinsettia Ave
Poinsettia Ave E
l Fuerte S
t
El F
uerte S
t
Alga Rd
Melrose D
r
Melrose D
r
Poinse
ttia Ave
Arm
ada D
r
Paseo
Del N
orte
Palomar Airport Rd
Aven
ida E
ncin
as
Aviara Pkwy
Busin
ess P
ark Dr
Busin
ess P
ark Dr
Sycamore Ave
Palomar Airport Rd
Palomar Airport Rd
El Fuerte St
El Fuerte St
Faraday AveFaraday Ave
Mel
rose
Dr
Mel
rose
Dr
Loker A
ve
Loker A
ve
Pacif icOcean
Lionshead Ave
Lionshead Ave
McClellan Palomar Airport
McClellan Palomar Airport
VistaC
ity B
oundary
Park Hyatt Aviara Resort
La Costa Resort & Spa
The Crossings at CarlsbadGolf Course
sings badurse
Legoland
Palomar AirportBusiness Park
Palomar AirportBusiness Park
Carlsbad Airport Center
Carlsbad Airport Center
CarlsbadResearchCenter
CarlsbadResearchCenter
Carlsbad Oaks
Carlsbad Oaks
Carlsbad
Oaks North
Carlsbad
Oaks North
Carlsbad RacewayCarlsbad Raceway
Palomar Forum
Palomar Forum
Bressi RanchBressi Ranch
CarlsbadRanch
This document has been prepared by Colliers International for advertising and general information only. Colliers
International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding
the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party
should undertake their own inquiries as to the accuracy of the information. Colliers International excludes
unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes
all liability for loss and damages arising there from.
prepared by ADAM MOLNAR, GREG LEWIS
TUCKER HOHENSTEIN & MIKE ERWIN, 760 438 8950
AT A GLANCE | Q1 2012 | INDUSTRIAL | CARLSBAD
www.colliers.com/carlsbad
OVERVIEW
The Escondido Industrial Market had minimal activity during the 1Q 2012, but continues to
have the lowest vacancy rate of any city in North San Diego County at 6.5%. There is no
new speculative industrial building or fl ex construction underway at this time. We most
likely will see Hamann Construction break ground on Cor-O-Van’s ~100,000 sf build-to-
suit in 2Q 2012. The new Palomar Medical Center under construction on a 56 acre site
in the Escondido Research and Technology Center continues to take shape with a target
opening of 3Q 2012.
ACTIVITY
There were no signifi cant sale or lease transactions in Escondido during 1Q 2012, but
there was good lease activity in the multi-tenant parks with 24 lease transactions ranging
between 1,000 - 5,000 square feet. Lease rates remained steady for 1Q 2012; sales
activity was minimal with only three transactions, all below $500,000.
FORECAST
The road ahead is bright for Escondido. With a healthy vacancy rate, there will be upward
pressure on rental rates and sale prices in 2012. The economy is showing signs of
recovery with an increase in employment which will drive demand for industrial space.
One of our clients is tentatively planning on breaking ground on a new speculative, for
lease industrial project in Escondido which is something we have not seen for several
years.
MARKET INDICATORS
INDUSTRIAL/R&D VACANCY RATESQ1 2012
Q1 2012 | INDUSTRIAL
CARLSBAD HISTORICAL MARKET TRENDS
10.6%
8.1%
6.9%
15.5%
6.5%
14.4%
0% 5% 10% 15% 20%
North County
Vista
San Marcos
Oceanside
Escondido
Carlsbad
INDUSTRIAL/R&D VACANCY RATESQ1 2012
VISTA HISTORICAL MARKET TRENDS
OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
-400
-300
-200
-100
0
100
200
300
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Q1
Vacancy R
ate
SF
(0
00
s)
Net Absorption New Supply Vacancy
ESCONDIDO HISTORICAL MARKET TRENDSS NORTH COUNTY NET ABSORPTION TRENDS
5-Yr. Avg. = 91,368 SF
NORTH COUNTY HISTORICAL MARKET TRENDS
Ocean
SanMarcos
Oceanside
Vista
Escondido
Carlsbad
Q12012
Q22012 (forecast)
VACANCY
NET ABSORPTION
CONSTRUCTION
RENTAL RATE
LEASE CONCESSIONS
ESCONDIDOAT A GLANCE
Escondido
Nor
dahl Roa
d
Nor
dahl Roa
Mission Road
Mission Road
Montiel Rd
Montiel Rd
Auto Park Way
Auto Park Way
Country Club DrCountry Club Dr
Industrial Ave
Industrial Ave
Simpson Way
Simpson Way
Citracado P
kwy
Citracado P
kwy
N A
ndr
ease
n D
rive
N A
ndr
ease
n D
rive
S A
ndr
ease
n D
rive
S A
ndr
ease
n D
rive
Enterprise St
Enterprise St
Val
ley
Par
kway
Val
ley
Par
kway
9th AveAv
Washington Avenue
Washington Avenue
Tulip
St
Tulip
St
Mission Avenue
Mission Avenue
Esco
ndid
o A
ve
Esco
ndid
o A
ve
Cen
ter City P
arkway
Cen
ter City P
arkway
Quin
ce St
Quin
ce St
Rock S
prin
gs R
d
Rock S
prin
gs R
d
PalomarPomeradoHospital
PalomarPomeradoHospital
EscondidoAuto ParkEscondidoAuto Park
Myers Avenue Myers Avenue
Auto Park Way
Auto Park Way
N. H
ale
Ave
nue
N. H
ale
Ave
nue
78
EscondidoResearch
& Tech Center
EscondidoResearch
& Tech Center
# PROPERTY NAME/ADDRESS BUYER TYPE SIZE (SF) SALE PRICE PRICE/SF
No building sales above 10,000 square feet
# PROPERTY NAME/ADDRESS TENANT NAME SIZE (SF) TERM EFF RATE/SF
1 302 Enterprise, Suite A Nexsan 13,772 19 months $0.63 Gross
SALES ACTIVITY
LEASING ACTIVITY
TRANSACTION ACTIVITY - Q1 2012
This document has been prepared by Colliers International for advertising and general information only. Colliers
International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding
the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party
should undertake their own inquiries as to the accuracy of the information. Colliers International excludes
unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes
all liability for loss and damages arising there from.
prepared by ADAM MOLNAR, GREG LEWIS
TUCKER HOHENSTEIN & MIKE ERWIN, 760 438 8950
AT A GLANCE | Q1 2012 | INDUSTRIAL | ESCONDIDO
www.colliers.com/carlsbad
OVERVIEW
While Oceanside still maintains the highest vacancy rate in North County at 15.46% the
115,069 SF of positive net absorption during Q1 2012 was the best quarterly performance
since Q2 2008. This extremely positive indicator signals the long anticipated recovery is
underway.
With just under 1.2m SF of vacant industrial space available there are numerous newer
and older properties of all sizes available to choose from including multi-tenant, free-
standing and larger manufacturing and warehouse distribution facilities.
ACTIVITY
Industrial sale transactions
were highlighted by the 28
acre user purchase by US
Foods in the Ocean Ranch
business park which closed in
March for $11.50 SF. Long term
plans include the construction
of 400,000 – 500,000 SF of
food storage and distribution
facilities replacing multiple
lease properties in Vista as
leases term out.
Industrial building sales
included the Gilead Sciences purchase of 35,856 SF at 4039 Avenida de la Plata. Gilead
owns the property next door and this expansion includes plans for a major renovation
of the property and a substantial capital improvement investment expanding their life
sciences business in the Oceanside area.
Lease transaction activity was strong this quarter and included a 66,780 SF lease in La
Pacifi ca in Ocean Ranch with La Cantina Doors, a tenant that expanded and relocated
from the Vista market. Four other leases between 12,000 and 18,000 were completed
showing momentum in medium size tenant activity which is a very positive factor.
FORECAST
Oceanside will continue to see positive net absorption this coming quarter and for the
remainder of the year. All economic indicators are trending positive and commercial
real estate offi ces are all reporting the best activity in years. Overall, deals are still taking
a long time to process, landlords are making concessions to keep existing tenants and
lower building sale prices and attractive interest rates are making user purchases very
aff ordable.
MARKET INDICATORS
INDUSTRIAL/R&D VACANCY RATESQ1 2012
Q1 2012 | INDUSTRIAL
CARLSBAD HISTORICAL MARKET TRENDS
10.6%
8.1%
6.9%
15.5%
6.5%
14.4%
0% 5% 10% 15% 20%
North County
Vista
San Marcos
Oceanside
Escondido
Carlsbad
INDUSTRIAL/R&D VACANCY RATESQ1 2012
VISTA HISTORICAL MARKET TRENDS
OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS
CARLSBAD HISTORICAL MARKET TRENDSINDUSTRIAL/R&D VACANCY RATESQ1 2012
VISTA HISTORICAL MARKET TRENDS
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
-400
-200
0
200
400
600
800
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Q1
Vacancy R
ate
SF
(0
00
s)
Net Absorption New Supply Vacancy
OCEANSIDE HISTORICAL MARKET TRENDSS SAN MARCOS HISTORICAL MARKET TRENDS
Ocean
Oceanside
Vista
SanMarcosCarlsbad
Q12012
Q22012 (forecast)
VACANCY
NET ABSORPTION
CONSTRUCTION
RENTAL RATE
LEASE CONCESSIONS
OCEANSIDEAT A GLANCE
Oceanside
# PROPERTY NAME/ADDRESS BUYER TYPE SIZE (SF) SALE PRICE PRICE/SF
1 4039 Avenida de la Plata Gilead Services / User 35,856 $4,586,000 $127.90
2 Ocean Ranch Lots 27 & 28 U.S. Foods 27.96 Acres $14,000,000 $11.50
# PROPERTY NAME/ADDRESS TENANT NAME SIZE (SF) TERM EFF RATE/SF
3 2817 Ocean Ranch Boulevard La Cantina Doors 66,780 60 months $0.55/NNN
4 398 Via El Centro Windigo International 12,000 36 months $0.50/G
5 3801 Ocean Ranch Blvd Star Metal Plating 12,450 60 months $0.49/NNN
6 2612 Temple Heights Dr Apical Industries 18,160 60 months $0.55/G
7 1353 Rocky Point Dr Dixon Scientific 18,911 38 months $0.64/G
SALES ACTIVITY
LEASING ACTIVITY
TRANSACTION ACTIVITY - Q1 2012
El CorazonEl Corazon
Ocean Ranch
Plaza Retail
Ocean Ranch
Plaza Retail
Paci c CoastBusiness ParkPaci c CoastBusiness Park
OceanRanchOceanRanch
Rancho Del OroRancho Del Oro
OceansideGateway
OceansideGateway
Sprinter Light
Rail Line
Sprinter Light
Rail Line
Ran
cho D
el O
ro D
r
Ran
cho D
el O
ro D
r
College B
lvd
College B
lvd
Mes
a Dr
Mes
a Dr
Avenida De La PlataAvenida De La Plata
Old Grove Road
Old Grove Road
Ocean
Ranch
Blvd
Ocean
Ranch
Blvd
Nor
th
Ave
Nor
th
Ave
Temple H
eights Dr
Temple H
eights Dr
Avenida D
el Oro
Avenida D
el Oro
Melro
se Dr
Oceanside BlvdOceanside Blvd
Cor
po
rate
Cen
ter D
r
Cor
po
rate
Cen
ter D
r
7
AT A GLANCE | Q4 2011 | INDUSTRIAL | OCEANSIDE
prepared by ADAM MOLNAR, GREG LEWIS
TUCKER HOHENSTEIN & MIKE ERWIN, 760 438 8950
This document has been prepared by Colliers International for advertising and general information only. Colliers
International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding
the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party
should undertake their own inquiries as to the accuracy of the information. Colliers International excludes
unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes
all liability for loss and damages arising there from.
www.colliers.com/carlsbad
OVERVIEW
The San Marcos industrial market positive absorption was 36,664 square feet and the
quarter ended with a vacancy rate of 6.9%. This is the second best in North County
following only Escondido at 6.5%. The positive absorption was on par with some of the best
quarters in the last three years and now San Marcos has posted three consecutive quarters
of net absorption which it hasn’t done since the recession started.
ACTIVITY
Industrial building sale activity was light with just one sale closing in the quarter. Metro
Western Sign & Awnings purchased a 24,128 square foot distressed property with an
outside yard area at 261 South Pacifi c Street from the Small Business Administration.
Leasing activity consisted of 3 leases between 13,000 and 25,000 square feet the largest
of which was a renewal. Leasing velocity is up with several transactions in the market that
should close in the next 30-60 days.
FORECAST
We expect to see a continued reduction in supply in the market as space is taken down and
no new product is added to the market. Activity in all product types including multi-tenant,
manufacturing and warehouse distribution is up signifi cantly. As the economy continues
to improve the nascent recovery should benefi t owners of industrial property in this core
market .
MARKET INDICATORS
INDUSTRIAL/R&D VACANCY RATESQ1 2012
Q1 2012 | INDUSTRIAL
CARLSBAD HISTORICAL MARKET TRENDS
10.6%
8.1%
6.9%
15.5%
6.5%
14.4%
0% 5% 10% 15% 20%
North County
Vista
San Marcos
Oceanside
Escondido
Carlsbad
INDUSTRIAL/R&D VACANCY RATESQ1 2012
VISTA HISTORICAL MARKET TRENDS
OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS
CARLSBAD HISTORICAL MARKET TRENDSINDUSTRIAL/R&D VACANCY RATESQ1 2012
VISTA HISTORICAL MARKET TRENDS
OCEANSIDE HISTORICAL MARKET TRENDS
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
-300
-200
-100
0
100
200
300
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Q1
Vacancy R
ate
SF
(0
00
s)
Net Absorption New Supply Vacancy
SAN MARCOS HISTORICAL MARKET TRENDS
Ocean
Oceanside
Vista
SanMarcos
Escondido
Carlsbad
Q12012
Q22012 (forecast)
VACANCY
NET ABSORPTION
CONSTRUCTION
RENTAL RATE
LEASE CONCESSIONS
SAN MARCOSAT A GLANCE
San Marcos
# PROPERTY NAME/ADDRESS BUYER TYPE SIZE (SF) SALE PRICE PRICE/SF
1 261 South Pacific Street Metro Western Sign 24,128 $1,550,000 $64.24
# PROPERTY NAME/ADDRESS TENANT NAME SIZE (SF) TERM EFF RATE/SF
2 170 Bosstick Blvd Proformance Apparel 12,816 36 months $0.62 GRS
3 970 Los Vallecitos Mountain Shadows 19,544 63 months $0.77 GRS
4 155 Mata Way Astro Converters 24,814 60 months $0.64 NNN
SALES ACTIVITY
LEASING ACTIVITY
TRANSACTION ACTIVITY - Q1 2012
Palomar Airport Rd
Palomar Airport Rd
W San Marcos Blvd
W San Marcos Blvd
Linda Vista Dr
Linda Vista Dr
Las
Posa
s Rd
Las
Posa
s Rd
La Mirada Dr
La Mirada Dr
W Mission RdW Mission Rd
E Mission Rd
E Mission Rd
Barham DrBarham Dr
N T
win
Oaks V
alley R
dN
Tw
in O
aks V
alley R
d
S T
win
Oaks V
alley R
d
S T
win
Oaks V
alley R
dSan
Elij
o Rd
San E
lijo
Rd
San Elijo Rd
Armorlite Dr
Armorlite DrRa
ncho
San
ta F
e Rd
Ranc
ho S
anta
Fe Rd
Melro
se D
r
Melro
se D
r
Discovery St
Discovery St
Craven RdCraven Rd
78
78
Rancho S
anta Fe Rd
Rancho S
anta Fe Rd
Lake San Marcos
Lake San Marcos
San Elijo HillsResidential
San Elijo HillsResidential
Cal StateUniversity
San Marcos
Cal StateUniversity
San Marcos
Kaiser PermanenteMed Center
Kaiser PermanenteMed Center
San MarcosCivic CenterSan MarcosCivic Center
RestaurantRow
RestaurantRow
Discovery HillsResidential
Discovery HillsResidential
VistaVista
La Costa Meadows
Business Park
La Costa Meadows
Business Park
This document has been prepared by Colliers International for advertising and general information only. Colliers
International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding
the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party
should undertake their own inquiries as to the accuracy of the information. Colliers International excludes
unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes
all liability for loss and damages arising there from.
prepared by ADAM MOLNAR, GREG LEWIS
TUCKER HOHENSTEIN & MIKE ERWIN, 760 438 8950
AT A GLANCE | Q1 2012 | INDUSTRIAL | SAN MARCOS
www.colliers.com/carlsbad
OVERVIEW
Investors and owner-occupiers took advantage of the few remaining distressed/
challenged real estate opportunities by purchasing four properties with an average sale
price of $69/SF. Demand from occupiers helped Vista post its third consecutive quarter
of positive net absorption resulting in a current vacancy rate of 8.1%. Vista continues to
plod a slow and steady course to recovery.
ACTIVITY
Investors showed confi dence in the market by purchasing two vacant buildings, which
included 65,000 square feet at 1081 Poinsettia Avenue and 39,672 square feet at 2390
Oak Ridge Way. Prices well below replacement cost and continued positive net absorption
are helping boost investor confi dence. Investors were not alone as owner-occupiers
purchased two more buildings totaling 61,000 square feet at an average price of $75/SF.
Leasing activity consisted of three transactions all occurring in the 20-25,000 square
foot range. Two of the tenants, PCA and Stroke Rehab, relocated from within the park and
Balboa Cal was a new tenant representing positive net absorption.
FORECAST
There are several transactions underway at the end of Q1 that will likely help boost
activity when they are completed during Q2. Look for investors and tenants to lead
the way, while owner-occupiers fi nd it diffi cult to locate good quality properties or are
reluctant to fi ll the price gap that has been created by recent distressed sales. Lease
rates will move sideways in the near term, but should begin to increase later in the year
as vacancy continues its slow decline. The current supply of spaces between 25-50,000
SF for lease will force landlords to complete aggressively for these tenants.
MARKET INDICATORS
INDUSTRIAL/R&D VACANCY RATESQ1 2012
Q1 2012 | INDUSTRIAL
CARLSBAD HISTORICAL MARKET TRENDS
10.6%
8.1%
6.9%
15.5%
6.5%
14.4%
0% 5% 10% 15% 20%
North County
Vista
San Marcos
Oceanside
Escondido
Carlsbad
INDUSTRIAL/R&D VACANCY RATESQ1 2012
VISTA HISTORICAL MARKET TRENDS
OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS
CARLSBAD HISTORICAL MARKET TRENDSINDUSTRIAL/R&D VACANCY RATESQ1 2012
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
-200
-100
0
100
200
300
400
500
600
700
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Q1
Vacancy R
ate
SF
(0
00
s)
Net Absorption New Supply Vacancy
VISTA HISTORICAL MARKET TRENDS
OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS
Q12012
Q22012 (forecast)
VACANCY
NET ABSORPTION
CONSTRUCTION
RENTAL RATE
LEASE CONCESSIONS
Ocean
Oceanside
Vista
SanMarcosCarlsbad
VISTAAT A GLANCE
Vista
# PROPERTY NAME/ADDRESS BUYER TYPE SIZE (SF) SALE PRICE PRICE/SF
1 1211 Liberty Way Owner User 25,189 $2,100,000 $83.37
2 991 Park Center Owner User 36,404 $2,395,000 $65.78
3 2390 Oak Ridge Way Investor 39,672 $2,760,000 $69.57
4 1081 Poinsettia Avenue Investor 65,000 $3,770,000 $58.00
# PROPERTY NAME/ADDRESS TENANT NAME SIZE (SF) TERM EFF RATE/SF
5 1389 Park Center Drive Ste B Balboa Cal, Inc. 23,493 84 months $0.51 NNN
6 1335 Sycamore Avenue Ste F PCA 25,394 60 months Undisclosed
7 1255 Keystone Avenue Stroke Rehab 21,065 60 months Undisclosed
SALES ACTIVITY
LEASING ACTIVITY
TRANSACTION ACTIVITY - Q1 2012
Sycamore Ave
Sycamore Ave
Syc
amor
e Ave
Oleander Ave
eander Ave
Green Oak Rd
Green Oak Rd
Shadowridge Dr
University Dr
La Mirada Dr
La Mirada Dr
Mel
rose
Dr
Mel
rose
Dr
Par
k Cen
ter Dr
Par
k Cen
ter Dr
Lionshead Ave
Palomar Airport R
d
Poin
settia
Ave
Poin
settia
Ave
Shadowridge
Golf Course
Shadowridge
Residential
Busin
ess
Park D
rB
usin
ess
Park D
r
Faraday AveFaraday Ave
7
AT A GLANCE | Q1 2012 | INDUSTRIAL | VISTA
This document has been prepared by Colliers International for advertising and general information only. Colliers
International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding
the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party
should undertake their own inquiries as to the accuracy of the information. Colliers International excludes
unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes
all liability for loss and damages arising there from.
prepared by ADAM MOLNAR, GREG LEWIS
TUCKER HOHENSTEIN & MIKE ERWIN, 760 438 8950
SAN DIEGO:
Jim Spain, SiORRegional managing Director | San Diego Region
License no. 00804745
4660 La Jolla Village Drive, Suite 100 San Diego, Ca 92122 | USatEl +1 858.677.5311FAX +1 858.795.4111
rESEArchEr:
CHRiSTOpHER REUTZResearch Director | San Diego Region
4660 La Jolla Village Drive, Suite 100 San Diego, Ca 92122 | USatEl +1 858.677.5385FAX +1 858.795.4185
This report has been prepared by Colliers international for general information only. information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. Colliers international does not guarantee, warrant or represent that the information contained in this document is correct. any interested party should undertake their own inquiries as to the accuracy of the information. Colliers international excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from.
accelerating success.
0%
2%
4%
6%
8%
10%
12%
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Q1
Vaca
ncy
Rate
SF (M
illio
ns)
Net Absorption New Supply Vacancy
NEW SUPPLY, ABSORPTION AND VACANCY RATES
7.4%
10.1%
9.9%
9.7%
18.5%
12.6%
14.8%
14.9%
0% 5% 10% 15% 20%
I-15 Corridor
North County
Central County
S.D. County
R&D Industrial
INDUSTRIAL VACANCY RATESQ1 2012
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
Q107
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
$ /
SF /
Mon
th (N
NN
)
Industrial R&D Combined
HISTORICAL RENTAL RATE TRENDSIndustrial, R&D and Combined RatesQuarterly Average Asking Rate Per SF Per Month (NNN)
49.0%
29.0%
13.1%5.1%
3.8%<= 2,000 SF [232]
2,001 - 5,000 SF [137]
5,001 - 10,000 SF [62]
10,001 - 20,000 SF [24]
>= 20,001 SF [18]
INDUSTRIAL LEASING ACTIVITY BY TENANT SIZEPercentage of Total Leases Completed in Q1 2012
0%
2%
4%
6%
8%
10%
12%
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Q1
Vaca
ncy
Rate
SF (M
illio
ns)
Net Absorption New Supply Vacancy
NEW SUPPLY, ABSORPTION AND VACANCY RATES
7.4%
10.1%
9.9%
9.7%
18.5%
12.6%
14.8%
14.9%
0% 5% 10% 15% 20%
I-15 Corridor
North County
Central County
S.D. County
R&D Industrial
INDUSTRIAL VACANCY RATESQ1 2012
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
Q107
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
$ /
SF /
Mon
th (N
NN
)
Industrial R&D Combined
HISTORICAL RENTAL RATE TRENDSIndustrial, R&D and Combined RatesQuarterly Average Asking Rate Per SF Per Month (NNN)
49.0%
29.0%
13.1%5.1%
3.8%<= 2,000 SF [232]
2,001 - 5,000 SF [137]
5,001 - 10,000 SF [62]
10,001 - 20,000 SF [24]
>= 20,001 SF [18]
INDUSTRIAL LEASING ACTIVITY BY TENANT SIZEPercentage of Total Leases Completed in Q1 2012
rENtAl rAtES
Since a historical high point in Q3 2008, the countywide average asking rental rate for combined industrial and R&D space has been steadily decreasing. Since Q1 2011, rents have stabilized in the low-$0.80/SF/mo. range. The Q1 2012 average rate of $0.82/SF/mo. is still 17% less than the historical high..
lEASING ActIVItY
Over 470 leases were completed in Q1 2012, totaling nearly 2.2 million square feet. 91% of all leases were 10,000 SF or less, while only 9% of all leases were over 10,000 SF in size. Smaller tenants made up a larger proportion of all leases signed in Q1.
www.colliers.com/sandiego
maRKET REpORTSAN DIEGO cOUNtY
www.colliers.com/sandiego
Industrial Demand Starts Strong During Q1 Net absorption soars to over half-a-million square feet
MArKEt OVErVIEW San Diego County’s industrial/R&D market experienced a large surge in demand in Q1 as nearly 560,000 SF of net absorption was recorded. This was the strongest quarter of net absorption since Q4 2010 and may be the strongest quarter this year. Robust leasing activity in Q3 and Q4 last year led to increased occupancies in Q1 this year. The leasing activity in late 2011 will carry into mid-2012 absorption activity which will likely translate into positive net absorption, but not at this recent surge level. While not as remarkable as Q3 and Q4 leasing, Q1 leasing activity was robust nevertheless and the next few quarters should post steady activity. This is an indicator of reasonably strong absorption for remainder of the year. net absorption for 2012 will likely be between 1.0 and 1.5 million SF with vacancy standing at 10.8% to 11.0%.
The February 2012 San Diego County unemployment rate measured 9.3%, exhibiting no change from January. The California unemployment rate increased (+0.1%) in February and stood at 11.4% while the national rate decreased (-0.1%) to 8.7%. as of February 2012, San Diego County experienced a year-over-year increase in non-farm employment totaling 9,000 jobs. The combined industry sectors of “Trade, Transportation, and Utilities” and “manufacturing” – the two predominant industrial-utilizing employment sectors – posted a net increase of 2,900 jobs over the same period.
in January, the USD Burnham-moores Center for Real Estate’s index of Leading Economic indicators for San Diego posted a 0.9% increase. This was the third consecutive month of increases that was driven primarily by significant gains in local consumer confidence, decreased
MArKEt trENDS
Strong positive demand drove countywide net absorption to over 559,000 square feet in Q1. in 2012, net absorption will stand at around 1.0 to 1.5 million SF, making it potentially the best year for demand since 2006. no new construction was completed in Q1 but nearly 130,000 SF will be completed for the year. Vacancy stood at 11.3% and will settle at or near 11.0% by year-end.
MArKEt INDIcAtOrS
INDUStrIAl VAcANcY rAtESQ1 2012
Q1 2012 Q2 2012 (P)
VAcANcY
NEt ABSOrPtION
cONStrUctION
rENtAl rAtE
Q1 2012 | INDUSTRIAL
0%
2%
4%
6%
8%
10%
12%
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Q1
Vaca
ncy
Rate
SF (M
illio
ns)
Net Absorption New Supply Vacancy
NEW SUPPLY, ABSORPTION AND VACANCY RATES
7.4%
10.1%
9.9%
9.7%
18.5%
12.6%
14.8%
14.9%
0% 5% 10% 15% 20%
I-15 Corridor
North County
Central County
S.D. County
R&D Industrial
INDUSTRIAL VACANCY RATESQ1 2012
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
Q107
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
$ /
SF /
Mon
th (N
NN
)
Industrial R&D Combined
HISTORICAL RENTAL RATE TRENDSIndustrial, R&D and Combined RatesQuarterly Average Asking Rate Per SF Per Month (NNN)
49.0%
29.0%
13.1%5.1%
3.8%<= 2,000 SF [232]
2,001 - 5,000 SF [137]
5,001 - 10,000 SF [62]
10,001 - 20,000 SF [24]
>= 20,001 SF [18]
INDUSTRIAL LEASING ACTIVITY BY TENANT SIZEPercentage of Total Leases Completed in Q1 2012
0%
2%
4%
6%
8%
10%
12%
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Q1
Vaca
ncy
Rate
SF (M
illio
ns)
Net Absorption New Supply Vacancy
NEW SUPPLY, ABSORPTION AND VACANCY RATES
7.4%
10.1%
9.9%
9.7%
18.5%
12.6%
14.8%
14.9%
0% 5% 10% 15% 20%
I-15 Corridor
North County
Central County
S.D. County
R&D Industrial
INDUSTRIAL VACANCY RATESQ1 2012
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
Q107
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
$ /
SF /
Mon
th (N
NN
)
Industrial R&D Combined
HISTORICAL RENTAL RATE TRENDSIndustrial, R&D and Combined RatesQuarterly Average Asking Rate Per SF Per Month (NNN)
49.0%
29.0%
13.1%5.1%
3.8%<= 2,000 SF [232]
2,001 - 5,000 SF [137]
5,001 - 10,000 SF [62]
10,001 - 20,000 SF [24]
>= 20,001 SF [18]
INDUSTRIAL LEASING ACTIVITY BY TENANT SIZEPercentage of Total Leases Completed in Q1 2012
9 basis points to 0.7% in Q1. Vacant sublease space comprises 1.3 million SF countywide. nearly 43% of all this space is concentrated in wet lab and R&D space in the Golden Triangle submarkets of Campus point/Eastgate and Torrey pines. Otay mesa – with over 182,000 square feet – has the most vacant warehouse sublease space in the county.
Vacancy has tended to remain stable in the 11%-12% range for the last two years, in part due to comparable levels of new construction (supply) and net absorption (demand). minimal demand in 2011 coupled with a virtually equal level of new construction has done very little to affect vacancy to a significant degree. Demand is forecasted to pick up in 2012 causing absorption to drive vacancy down to or near 11%.
NEW SUPPlY no new construction was completed in Q1; there is 253,245 square feet under construction. This includes a 129,845-square-foot build-to-suit for HOiST Fitness in poway to be completed in Q4 2012 and a 123,400-square-foot additional building in the illumina campus in the Campus point/Eastgate submarket which will be completed in mid-2013.
proposed new development totals about 7.75 million SF with over 70% of this space concentrated in just four submarkets: Otay mesa, Carlsbad, East County and Oceanside. most proposed future development is concentrated in build-to-suits with speculative development trailing for several years to come.
512 offices in 61 countries on 6 continentsUnited States: 125Canada: 38Latin america: 18Asia Pacific: 214EmEa: 117
• $59.6 billion in annual transactions
• 1.0 billion square feet under management
• Over 12,500 professionals
MARKET REPORT | Q1 2012 | INDUSTRIAL | SAN DIEGO COUNTY
SAN DIEGO cOUNtY
The San Diego County industrial/R&D market is comprised of 188.4 million square feet of industrial and R&D space. The county is divided into three major market areas with 21 submarkets within them. nearly 62% of countywide industrial/R&D space is located within the 13 submarkets of the Central County market. industrial buildings (including manufacturing, warehouse, distribution, and multi-tenant/incubator) make up 70% of total inventory while R&D buildings (including flex, wet lab and corporate headquarters) make up the remaining 30% of the total inventory.
PROPERTY NAME/ADDRESS SUBMARKET TYPE SIZE SF SALE PRICE PRICE/SF
13550 Stowe Drive Poway Industrial 112,000 $11,800,000 $105
4039 Avenida De La Plata Oceanside R&D 35,856 $4,586,000 $128
1081 Poinsettia Avenue Vista Industrial 65,000 $3,770,000 $58
2390 Oak Ridge Way Vista Industrial 39,672 $2,760,000 $70
9355 Chesapeake Drive Kearny Mesa R&D 14,586 $2,375,000 $163
PROPERTY NAME/ADDRESS SUBMARKET TYPE SIZE SF
2858 Loker Avenue E. Carlsbad Industrial 64,541 PODS Enterprises (renewal)
7130 Miramar Road Miramar Industrial 58,368 Ashley Furniture
7590 Carroll Road Miramar Industrial 52,103
10445 Pacific Center Court Sorrento Mesa R&D 48,709
5950 Nancy Ridge Drive Miramar Industrial 46,800 InCharacter Costumes LLC
TRANSACTION ACTIVITY - Q1 2012
SALES ACTIVITY
LEASING ACTIVITY
Qualcomm
TENANT NAME
R.R. Donnelley & Sons (renewal)
initial claims for unemployment insurance and increased local stock prices. January initial claims for unemployment insurance hit their lowest level – on a seasonally-adjusted basis – since august 2008, while help wanted advertising increased for the 13th straight month.
NEt ABSOrPtION Q1 combined industrial/R&D net absorption totaled a positive 559,233 SF. if this rate of absorption continues throughout the rest of the year, demand in 2012 will be close to pre-recession levels. Countywide net absorption for industrial space (manufacturing, warehouse, distribution, and multi-tenant/incubator building uses) totaled a positive 320,241 SF and R&D space (flex, wet lab and corporate headquarters building uses) totaled a positive 238,992 SF.
absorption over the last two years has been primarily bolstered by large tenants and users who have expanded or leased additional space throughout the county. However, the majority of Q1 absorption activity was attributed to smaller tenants below 10,000 SF. This was especially true in the north County and South County areas. This included not only expansions and relocations, but new tenants and users as well. as the local and national economy continues to improve, we
can expect this trend to endure over the next couple of years, providing a stable level of demand that is less prone to extreme levels of negative absorption.
The countywide overall industrial/R&D average asking rental rate reached its market bottom of $0.80/SF/mo. in Q1 2011. For the last five quarters, the rent has settled in the low-$0.80 range and stood at $0.82/SF/mo. in Q1 2012. in Q1, rental rates began to appreciate in all submarkets of the i-15 Corridor and most submarkets of the Central County with an overall increase in the total Central County. However, the north County submarkets yielded either no change or minor decreases in their rental rates.
VAcANcY The Q1 overall vacancy rate decreased by 26 basis points to stand at 11.3%. The industrial and R&D vacancy components measured 9.7% and 14.9%, respectively. Compared to one year ago, R&D vacancy has increased by 71 basis points (14.2% in Q1 2011) while industrial vacancy has decreased by 9 basis points (9.8% in Q1 2011).
The Q1 combined industrial/R&D direct vacancy rate was 10.6% compared to 10.8% at the end of 2011. Sublease vacancy inched down by
NORTH COUNTYI-15 CORRIDORCENTRAL COUNTYDOWNTOWNSOUTH BAY/EAST COUNTY
NORTh cOUNTy
I-15 cORRIDOR
McAS MIRAMAR
cENTRALcOUNTy
cOllIErS INtErNAtIONAl | P. 3
MARKET REPORT | Q1 2012 | INDUSTRIAL | SAN DIEGO COUNTY
continued on page 4
Submarket / Class Bldgs
Total
Inventory
SF
Direct
Vacancy
Rate
Sublease
Vacancy
Rate
Total
Vacancy
Rate
Prior Qtr
Vacancy
Rate *
Net Abs
Current Qtr
SF
Net Abs
YTD
SF
New Supply
Current Qtr
SF
Under
Construction
SF
Proposed
SF
INDUSTRIAL TOTALS BY MARKET Manufacturing, warehouse, distribution, and multi-tenant/incubatorCentral County 3,054 81,812,573 9.5% 0.4% 9.9% 10.0% 194,335 194,335 0 0 2,361,960 $0.62North County 2,190 40,302,817 10.0% 0.0% 10.1% 10.4% 108,584 108,584 0 0 1,315,951 $0.70I-15 Corridor 302 10,569,503 7.0% 0.4% 7.4% 7.3% 17,322 17,322 0 129,845 382,900 $0.87TOTAL 5,546 132,684,893 9.4% 0.3% 9.7% 9.9% 320,241 320,241 0 129,845 4,060,811 $0.68R&D TOTALS BY MARKET Flex, wet lab and corporate headquartersCentral County 823 34,399,640 12.6% 2.2% 14.8% 15.1% 97,162 97,162 0 123,400 1,622,724 $1.13North County 347 12,030,463 12.0% 0.5% 12.6% 12.6% 63,762 63,762 0 0 1,458,474 $1.05I-15 Corridor 134 9,331,288 17.5% 1.0% 18.5% 20.5% 78,068 78,068 0 0 605,000 $1.01TOTAL 1,304 55,761,391 13.3% 1.6% 14.9% 15.4% 238,992 238,992 0 123,400 3,686,198 $1.08COMBINED INDUSTRIAL / R&D BY MARKET AND SUBMARKETCentral CountyAirport / SA 76 1,878,846 3.8% 0.0% 3.8% 1.3% (39,970) (39,970) 0 0 0 $0.89Campus Pt / Egate 42 4,065,514 16.0% 11.4% 27.4% 26.1% (46,693) (46,693) 0 123,400 601,967 $2.25Central San Diego 397 8,377,286 4.9% 0.6% 5.5% 5.6% 12,569 12,569 0 0 0 $0.65East County 604 14,148,926 8.1% 0.0% 8.1% 7.8% (13,792) (13,792) 0 0 1,229,000 $0.67Kearny Mesa 650 17,391,882 5.7% 0.3% 6.0% 6.5% 75,697 75,697 0 0 65,691 $0.97Miramar 586 13,792,527 10.5% 0.4% 10.8% 11.4% 76,662 76,662 0 0 0 $0.88Mission Gorge / Vly 95 2,273,798 10.2% 2.9% 13.1% 13.2% 1,319 1,319 0 0 0 $0.82Otay Mesa 294 14,645,809 21.2% 1.3% 22.5% 23.0% 104,622 104,622 0 0 1,619,960 $0.47Rose Cyn / Morena 189 4,140,283 5.8% 0.0% 5.8% 3.9% (3,427) (3,427) 0 0 0 $0.75Sorrento Mesa 273 13,495,753 13.3% 0.2% 13.5% 14.2% 93,159 93,159 0 0 229,136 $1.08Sorrento Valley 106 3,411,905 9.4% 2.0% 11.4% 11.6% 7,526 7,526 0 0 0 $1.38South Bay 498 13,556,827 7.4% 0.0% 7.4% 7.5% (4,834) (4,834) 0 0 0 $0.58Torrey Pines 67 5,032,857 13.8% 1.9% 15.7% 16.3% 28,659 28,659 0 0 238,930 N/ATOTAL 3,877 116,212,213 10.4% 0.9% 11.3% 11.5% 291,497 291,497 0 123,400 3,984,684 $0.79North CountyCarlsbad 485 15,025,194 14.0% 0.4% 14.4% 14.1% 14,650 14,650 0 0 1,357,132 $0.97Escondido 637 7,184,335 6.4% 0.1% 6.5% 6.2% (26,464) (26,464) 0 0 39,500 $0.72Oceanside 396 8,038,265 15.5% 0.0% 15.5% 17.1% 115,069 115,069 0 0 1,227,361 $0.63San Marcos 489 8,710,664 6.9% 0.0% 6.9% 7.1% 36,664 36,664 0 0 53,000 $0.82Vista 530 13,374,822 8.0% 0.1% 8.1% 8.6% 32,427 32,427 0 0 97,432 $0.68TOTAL 2,537 52,333,280 10.5% 0.2% 10.6% 10.9% 172,346 172,346 0 0 2,774,425 $0.79I-15 CorridorPoway 215 8,196,473 4.5% 0.5% 5.1% 4.3% (31,857) (31,857) 0 129,845 447,900 $0.78Rancho Bernardo 146 9,559,699 16.3% 0.1% 16.4% 18.1% 147,296 147,296 0 0 0 $1.01Scripps Ranch 75 2,144,619 20.6% 3.8% 24.4% 27.7% (20,049) (20,049) 0 0 540,000 $0.96TOTAL 436 19,900,791 11.9% 0.7% 12.6% 13.5% 95,390 95,390 0 129,845 987,900 $0.95SAN DIEGO COUNTY COMBINED INDUSTRIAL / R&DTOTAL 6,850 188,446,284 10.6% 0.7% 11.3% 11.5% 559,233 559,233 0 253,245 7,747,009 $0.82QUARTERLY COMPARISONQ1 2012 6,850 188,446,284 10.6% 0.7% 11.3% 11.5% 559,233 559,233 0 253,245 7,747,009 $0.82Q4 2011 6,849 188,338,032 10.8% 0.8% 11.5% 11.6% 180,204 236,197 0 253,245 7,515,118 $0.83Q3 2011 * 6,849 188,338,032 10.9% 0.7% 11.6% 11.7% 280,420 55,993 202,340 253,245 7,515,118 $0.82Q2 2011 * 6,846 188,135,692 10.9% 0.8% 11.7% 11.5% (297,544) (224,427) 0 202,340 7,160,249 $0.81Q1 2011 * 6,846 188,135,692 10.7% 0.9% 11.5% 11.3% 73,117 73,117 0 202,340 6,264,113 $0.80
* Revised in Q4 2011.Average rental rates are defined as the average asking monthly rate per square foot normalized to a "triple net" basis.
San Diego County Industrial Market
VACANCY NET ABSORPTIONAvg
Rental
Rate
(NNN)
CONSTRUCTIONEXISTING PROPERTIES
INDUSTRIAL OVERVIEW
Q1 2012
P. 2 | cOllIErS INtErNAtIONAl
MARKET REPORT | Q1 2012 | INDUSTRIAL | SAN DIEGO COUNTY
SAN DIEGO cOUNtY
The San Diego County industrial/R&D market is comprised of 188.4 million square feet of industrial and R&D space. The county is divided into three major market areas with 21 submarkets within them. nearly 62% of countywide industrial/R&D space is located within the 13 submarkets of the Central County market. industrial buildings (including manufacturing, warehouse, distribution, and multi-tenant/incubator) make up 70% of total inventory while R&D buildings (including flex, wet lab and corporate headquarters) make up the remaining 30% of the total inventory.
PROPERTY NAME/ADDRESS SUBMARKET TYPE SIZE SF SALE PRICE PRICE/SF
13550 Stowe Drive Poway Industrial 112,000 $11,800,000 $105
4039 Avenida De La Plata Oceanside R&D 35,856 $4,586,000 $128
1081 Poinsettia Avenue Vista Industrial 65,000 $3,770,000 $58
2390 Oak Ridge Way Vista Industrial 39,672 $2,760,000 $70
9355 Chesapeake Drive Kearny Mesa R&D 14,586 $2,375,000 $163
PROPERTY NAME/ADDRESS SUBMARKET TYPE SIZE SF
2858 Loker Avenue E. Carlsbad Industrial 64,541 PODS Enterprises (renewal)
7130 Miramar Road Miramar Industrial 58,368 Ashley Furniture
7590 Carroll Road Miramar Industrial 52,103
10445 Pacific Center Court Sorrento Mesa R&D 48,709
5950 Nancy Ridge Drive Miramar Industrial 46,800 InCharacter Costumes LLC
TRANSACTION ACTIVITY - Q1 2012
SALES ACTIVITY
LEASING ACTIVITY
Qualcomm
TENANT NAME
R.R. Donnelley & Sons (renewal)
initial claims for unemployment insurance and increased local stock prices. January initial claims for unemployment insurance hit their lowest level – on a seasonally-adjusted basis – since august 2008, while help wanted advertising increased for the 13th straight month.
NEt ABSOrPtION Q1 combined industrial/R&D net absorption totaled a positive 559,233 SF. if this rate of absorption continues throughout the rest of the year, demand in 2012 will be close to pre-recession levels. Countywide net absorption for industrial space (manufacturing, warehouse, distribution, and multi-tenant/incubator building uses) totaled a positive 320,241 SF and R&D space (flex, wet lab and corporate headquarters building uses) totaled a positive 238,992 SF.
absorption over the last two years has been primarily bolstered by large tenants and users who have expanded or leased additional space throughout the county. However, the majority of Q1 absorption activity was attributed to smaller tenants below 10,000 SF. This was especially true in the north County and South County areas. This included not only expansions and relocations, but new tenants and users as well. as the local and national economy continues to improve, we
can expect this trend to endure over the next couple of years, providing a stable level of demand that is less prone to extreme levels of negative absorption.
The countywide overall industrial/R&D average asking rental rate reached its market bottom of $0.80/SF/mo. in Q1 2011. For the last five quarters, the rent has settled in the low-$0.80 range and stood at $0.82/SF/mo. in Q1 2012. in Q1, rental rates began to appreciate in all submarkets of the i-15 Corridor and most submarkets of the Central County with an overall increase in the total Central County. However, the north County submarkets yielded either no change or minor decreases in their rental rates.
VAcANcY The Q1 overall vacancy rate decreased by 26 basis points to stand at 11.3%. The industrial and R&D vacancy components measured 9.7% and 14.9%, respectively. Compared to one year ago, R&D vacancy has increased by 71 basis points (14.2% in Q1 2011) while industrial vacancy has decreased by 9 basis points (9.8% in Q1 2011).
The Q1 combined industrial/R&D direct vacancy rate was 10.6% compared to 10.8% at the end of 2011. Sublease vacancy inched down by
NORTH COUNTYI-15 CORRIDORCENTRAL COUNTYDOWNTOWNSOUTH BAY/EAST COUNTY
NORTh cOUNTy
I-15 cORRIDOR
McAS MIRAMAR
cENTRALcOUNTy
cOllIErS INtErNAtIONAl | P. 3
MARKET REPORT | Q1 2012 | INDUSTRIAL | SAN DIEGO COUNTY
continued on page 4
Submarket / Class Bldgs
Total
Inventory
SF
Direct
Vacancy
Rate
Sublease
Vacancy
Rate
Total
Vacancy
Rate
Prior Qtr
Vacancy
Rate *
Net Abs
Current Qtr
SF
Net Abs
YTD
SF
New Supply
Current Qtr
SF
Under
Construction
SF
Proposed
SF
INDUSTRIAL TOTALS BY MARKET Manufacturing, warehouse, distribution, and multi-tenant/incubatorCentral County 3,054 81,812,573 9.5% 0.4% 9.9% 10.0% 194,335 194,335 0 0 2,361,960 $0.62North County 2,190 40,302,817 10.0% 0.0% 10.1% 10.4% 108,584 108,584 0 0 1,315,951 $0.70I-15 Corridor 302 10,569,503 7.0% 0.4% 7.4% 7.3% 17,322 17,322 0 129,845 382,900 $0.87TOTAL 5,546 132,684,893 9.4% 0.3% 9.7% 9.9% 320,241 320,241 0 129,845 4,060,811 $0.68R&D TOTALS BY MARKET Flex, wet lab and corporate headquartersCentral County 823 34,399,640 12.6% 2.2% 14.8% 15.1% 97,162 97,162 0 123,400 1,622,724 $1.13North County 347 12,030,463 12.0% 0.5% 12.6% 12.6% 63,762 63,762 0 0 1,458,474 $1.05I-15 Corridor 134 9,331,288 17.5% 1.0% 18.5% 20.5% 78,068 78,068 0 0 605,000 $1.01TOTAL 1,304 55,761,391 13.3% 1.6% 14.9% 15.4% 238,992 238,992 0 123,400 3,686,198 $1.08COMBINED INDUSTRIAL / R&D BY MARKET AND SUBMARKETCentral CountyAirport / SA 76 1,878,846 3.8% 0.0% 3.8% 1.3% (39,970) (39,970) 0 0 0 $0.89Campus Pt / Egate 42 4,065,514 16.0% 11.4% 27.4% 26.1% (46,693) (46,693) 0 123,400 601,967 $2.25Central San Diego 397 8,377,286 4.9% 0.6% 5.5% 5.6% 12,569 12,569 0 0 0 $0.65East County 604 14,148,926 8.1% 0.0% 8.1% 7.8% (13,792) (13,792) 0 0 1,229,000 $0.67Kearny Mesa 650 17,391,882 5.7% 0.3% 6.0% 6.5% 75,697 75,697 0 0 65,691 $0.97Miramar 586 13,792,527 10.5% 0.4% 10.8% 11.4% 76,662 76,662 0 0 0 $0.88Mission Gorge / Vly 95 2,273,798 10.2% 2.9% 13.1% 13.2% 1,319 1,319 0 0 0 $0.82Otay Mesa 294 14,645,809 21.2% 1.3% 22.5% 23.0% 104,622 104,622 0 0 1,619,960 $0.47Rose Cyn / Morena 189 4,140,283 5.8% 0.0% 5.8% 3.9% (3,427) (3,427) 0 0 0 $0.75Sorrento Mesa 273 13,495,753 13.3% 0.2% 13.5% 14.2% 93,159 93,159 0 0 229,136 $1.08Sorrento Valley 106 3,411,905 9.4% 2.0% 11.4% 11.6% 7,526 7,526 0 0 0 $1.38South Bay 498 13,556,827 7.4% 0.0% 7.4% 7.5% (4,834) (4,834) 0 0 0 $0.58Torrey Pines 67 5,032,857 13.8% 1.9% 15.7% 16.3% 28,659 28,659 0 0 238,930 N/ATOTAL 3,877 116,212,213 10.4% 0.9% 11.3% 11.5% 291,497 291,497 0 123,400 3,984,684 $0.79North CountyCarlsbad 485 15,025,194 14.0% 0.4% 14.4% 14.1% 14,650 14,650 0 0 1,357,132 $0.97Escondido 637 7,184,335 6.4% 0.1% 6.5% 6.2% (26,464) (26,464) 0 0 39,500 $0.72Oceanside 396 8,038,265 15.5% 0.0% 15.5% 17.1% 115,069 115,069 0 0 1,227,361 $0.63San Marcos 489 8,710,664 6.9% 0.0% 6.9% 7.1% 36,664 36,664 0 0 53,000 $0.82Vista 530 13,374,822 8.0% 0.1% 8.1% 8.6% 32,427 32,427 0 0 97,432 $0.68TOTAL 2,537 52,333,280 10.5% 0.2% 10.6% 10.9% 172,346 172,346 0 0 2,774,425 $0.79I-15 CorridorPoway 215 8,196,473 4.5% 0.5% 5.1% 4.3% (31,857) (31,857) 0 129,845 447,900 $0.78Rancho Bernardo 146 9,559,699 16.3% 0.1% 16.4% 18.1% 147,296 147,296 0 0 0 $1.01Scripps Ranch 75 2,144,619 20.6% 3.8% 24.4% 27.7% (20,049) (20,049) 0 0 540,000 $0.96TOTAL 436 19,900,791 11.9% 0.7% 12.6% 13.5% 95,390 95,390 0 129,845 987,900 $0.95SAN DIEGO COUNTY COMBINED INDUSTRIAL / R&DTOTAL 6,850 188,446,284 10.6% 0.7% 11.3% 11.5% 559,233 559,233 0 253,245 7,747,009 $0.82QUARTERLY COMPARISONQ1 2012 6,850 188,446,284 10.6% 0.7% 11.3% 11.5% 559,233 559,233 0 253,245 7,747,009 $0.82Q4 2011 6,849 188,338,032 10.8% 0.8% 11.5% 11.6% 180,204 236,197 0 253,245 7,515,118 $0.83Q3 2011 * 6,849 188,338,032 10.9% 0.7% 11.6% 11.7% 280,420 55,993 202,340 253,245 7,515,118 $0.82Q2 2011 * 6,846 188,135,692 10.9% 0.8% 11.7% 11.5% (297,544) (224,427) 0 202,340 7,160,249 $0.81Q1 2011 * 6,846 188,135,692 10.7% 0.9% 11.5% 11.3% 73,117 73,117 0 202,340 6,264,113 $0.80
* Revised in Q4 2011.Average rental rates are defined as the average asking monthly rate per square foot normalized to a "triple net" basis.
San Diego County Industrial Market
VACANCY NET ABSORPTIONAvg
Rental
Rate
(NNN)
CONSTRUCTIONEXISTING PROPERTIES
INDUSTRIAL OVERVIEW
Q1 2012
P. 2 | cOllIErS INtErNAtIONAl
MARKET REPORT | Q1 2012 | INDUSTRIAL | SAN DIEGO COUNTY
SAN DIEGO:
Jim Spain, SiORRegional managing Director | San Diego Region
License no. 00804745
4660 La Jolla Village Drive, Suite 100 San Diego, Ca 92122 | USatEl +1 858.677.5311FAX +1 858.795.4111
rESEArchEr:
CHRiSTOpHER REUTZResearch Director | San Diego Region
4660 La Jolla Village Drive, Suite 100 San Diego, Ca 92122 | USatEl +1 858.677.5385FAX +1 858.795.4185
This report has been prepared by Colliers international for general information only. information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. Colliers international does not guarantee, warrant or represent that the information contained in this document is correct. any interested party should undertake their own inquiries as to the accuracy of the information. Colliers international excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from.
accelerating success.
0%
2%
4%
6%
8%
10%
12%
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Q1
Vaca
ncy
Rate
SF (M
illio
ns)
Net Absorption New Supply Vacancy
NEW SUPPLY, ABSORPTION AND VACANCY RATES
7.4%
10.1%
9.9%
9.7%
18.5%
12.6%
14.8%
14.9%
0% 5% 10% 15% 20%
I-15 Corridor
North County
Central County
S.D. County
R&D Industrial
INDUSTRIAL VACANCY RATESQ1 2012
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
Q107
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
$ /
SF /
Mon
th (N
NN
)
Industrial R&D Combined
HISTORICAL RENTAL RATE TRENDSIndustrial, R&D and Combined RatesQuarterly Average Asking Rate Per SF Per Month (NNN)
49.0%
29.0%
13.1%5.1%
3.8%<= 2,000 SF [232]
2,001 - 5,000 SF [137]
5,001 - 10,000 SF [62]
10,001 - 20,000 SF [24]
>= 20,001 SF [18]
INDUSTRIAL LEASING ACTIVITY BY TENANT SIZEPercentage of Total Leases Completed in Q1 2012
0%
2%
4%
6%
8%
10%
12%
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Q1
Vaca
ncy
Rate
SF (M
illio
ns)
Net Absorption New Supply Vacancy
NEW SUPPLY, ABSORPTION AND VACANCY RATES
7.4%
10.1%
9.9%
9.7%
18.5%
12.6%
14.8%
14.9%
0% 5% 10% 15% 20%
I-15 Corridor
North County
Central County
S.D. County
R&D Industrial
INDUSTRIAL VACANCY RATESQ1 2012
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
Q107
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
$ /
SF /
Mon
th (N
NN
)
Industrial R&D Combined
HISTORICAL RENTAL RATE TRENDSIndustrial, R&D and Combined RatesQuarterly Average Asking Rate Per SF Per Month (NNN)
49.0%
29.0%
13.1%5.1%
3.8%<= 2,000 SF [232]
2,001 - 5,000 SF [137]
5,001 - 10,000 SF [62]
10,001 - 20,000 SF [24]
>= 20,001 SF [18]
INDUSTRIAL LEASING ACTIVITY BY TENANT SIZEPercentage of Total Leases Completed in Q1 2012
rENtAl rAtES
Since a historical high point in Q3 2008, the countywide average asking rental rate for combined industrial and R&D space has been steadily decreasing. Since Q1 2011, rents have stabilized in the low-$0.80/SF/mo. range. The Q1 2012 average rate of $0.82/SF/mo. is still 17% less than the historical high..
lEASING ActIVItY
Over 470 leases were completed in Q1 2012, totaling nearly 2.2 million square feet. 91% of all leases were 10,000 SF or less, while only 9% of all leases were over 10,000 SF in size. Smaller tenants made up a larger proportion of all leases signed in Q1.
www.colliers.com/sandiego
maRKET REpORTSAN DIEGO cOUNtY
www.colliers.com/sandiego
Industrial Demand Starts Strong During Q1 Net absorption soars to over half-a-million square feet
MArKEt OVErVIEW San Diego County’s industrial/R&D market experienced a large surge in demand in Q1 as nearly 560,000 SF of net absorption was recorded. This was the strongest quarter of net absorption since Q4 2010 and may be the strongest quarter this year. Robust leasing activity in Q3 and Q4 last year led to increased occupancies in Q1 this year. The leasing activity in late 2011 will carry into mid-2012 absorption activity which will likely translate into positive net absorption, but not at this recent surge level. While not as remarkable as Q3 and Q4 leasing, Q1 leasing activity was robust nevertheless and the next few quarters should post steady activity. This is an indicator of reasonably strong absorption for remainder of the year. net absorption for 2012 will likely be between 1.0 and 1.5 million SF with vacancy standing at 10.8% to 11.0%.
The February 2012 San Diego County unemployment rate measured 9.3%, exhibiting no change from January. The California unemployment rate increased (+0.1%) in February and stood at 11.4% while the national rate decreased (-0.1%) to 8.7%. as of February 2012, San Diego County experienced a year-over-year increase in non-farm employment totaling 9,000 jobs. The combined industry sectors of “Trade, Transportation, and Utilities” and “manufacturing” – the two predominant industrial-utilizing employment sectors – posted a net increase of 2,900 jobs over the same period.
in January, the USD Burnham-moores Center for Real Estate’s index of Leading Economic indicators for San Diego posted a 0.9% increase. This was the third consecutive month of increases that was driven primarily by significant gains in local consumer confidence, decreased
MArKEt trENDS
Strong positive demand drove countywide net absorption to over 559,000 square feet in Q1. in 2012, net absorption will stand at around 1.0 to 1.5 million SF, making it potentially the best year for demand since 2006. no new construction was completed in Q1 but nearly 130,000 SF will be completed for the year. Vacancy stood at 11.3% and will settle at or near 11.0% by year-end.
MArKEt INDIcAtOrS
INDUStrIAl VAcANcY rAtESQ1 2012
Q1 2012 Q2 2012 (P)
VAcANcY
NEt ABSOrPtION
cONStrUctION
rENtAl rAtE
Q1 2012 | INDUSTRIAL
0%
2%
4%
6%
8%
10%
12%
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Q1
Vaca
ncy
Rate
SF (M
illio
ns)
Net Absorption New Supply Vacancy
NEW SUPPLY, ABSORPTION AND VACANCY RATES
7.4%
10.1%
9.9%
9.7%
18.5%
12.6%
14.8%
14.9%
0% 5% 10% 15% 20%
I-15 Corridor
North County
Central County
S.D. County
R&D Industrial
INDUSTRIAL VACANCY RATESQ1 2012
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
Q107
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
$ /
SF /
Mon
th (N
NN
)
Industrial R&D Combined
HISTORICAL RENTAL RATE TRENDSIndustrial, R&D and Combined RatesQuarterly Average Asking Rate Per SF Per Month (NNN)
49.0%
29.0%
13.1%5.1%
3.8%<= 2,000 SF [232]
2,001 - 5,000 SF [137]
5,001 - 10,000 SF [62]
10,001 - 20,000 SF [24]
>= 20,001 SF [18]
INDUSTRIAL LEASING ACTIVITY BY TENANT SIZEPercentage of Total Leases Completed in Q1 2012
0%
2%
4%
6%
8%
10%
12%
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Q1
Vaca
ncy
Rate
SF (M
illio
ns)
Net Absorption New Supply Vacancy
NEW SUPPLY, ABSORPTION AND VACANCY RATES
7.4%
10.1%
9.9%
9.7%
18.5%
12.6%
14.8%
14.9%
0% 5% 10% 15% 20%
I-15 Corridor
North County
Central County
S.D. County
R&D Industrial
INDUSTRIAL VACANCY RATESQ1 2012
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
Q107
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
$ /
SF /
Mon
th (N
NN
)
Industrial R&D Combined
HISTORICAL RENTAL RATE TRENDSIndustrial, R&D and Combined RatesQuarterly Average Asking Rate Per SF Per Month (NNN)
49.0%
29.0%
13.1%5.1%
3.8%<= 2,000 SF [232]
2,001 - 5,000 SF [137]
5,001 - 10,000 SF [62]
10,001 - 20,000 SF [24]
>= 20,001 SF [18]
INDUSTRIAL LEASING ACTIVITY BY TENANT SIZEPercentage of Total Leases Completed in Q1 2012
9 basis points to 0.7% in Q1. Vacant sublease space comprises 1.3 million SF countywide. nearly 43% of all this space is concentrated in wet lab and R&D space in the Golden Triangle submarkets of Campus point/Eastgate and Torrey pines. Otay mesa – with over 182,000 square feet – has the most vacant warehouse sublease space in the county.
Vacancy has tended to remain stable in the 11%-12% range for the last two years, in part due to comparable levels of new construction (supply) and net absorption (demand). minimal demand in 2011 coupled with a virtually equal level of new construction has done very little to affect vacancy to a significant degree. Demand is forecasted to pick up in 2012 causing absorption to drive vacancy down to or near 11%.
NEW SUPPlY no new construction was completed in Q1; there is 253,245 square feet under construction. This includes a 129,845-square-foot build-to-suit for HOiST Fitness in poway to be completed in Q4 2012 and a 123,400-square-foot additional building in the illumina campus in the Campus point/Eastgate submarket which will be completed in mid-2013.
proposed new development totals about 7.75 million SF with over 70% of this space concentrated in just four submarkets: Otay mesa, Carlsbad, East County and Oceanside. most proposed future development is concentrated in build-to-suits with speculative development trailing for several years to come.
512 offices in 61 countries on 6 continentsUnited States: 125Canada: 38Latin america: 18Asia Pacific: 214EmEa: 117
• $59.6 billion in annual transactions
• 1.0 billion square feet under management
• Over 12,500 professionals
MARKET REPORT | Q1 2012 | INDUSTRIAL | SAN DIEGO COUNTY
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