The stage appears to be set for continued improvement for San Diego County’s commercial real estate markets, including the office, industrial, retail and apartment sectors.


More than 85 percent of the office absorption in 2010 and 2011 had been of the Class A variety, which helped bring that vacancy in the central part of San Diego to less than 10 percent as of the end of 2012, according to CBRE, a large, Los Angeles-based commercial real estate firm.

This past year, CBRE noted that as Class A office space became more expensive and less available, B space began to fill.

“As concessions fall and rental rates continue to appreciate for Class A space, Class B will benefit as tenants seek more affordable options,” CBRE stated. “Well-located, high-quality Class B assets should see more tenant activity resulting in rental rate and value appreciation in 2013.”

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The sale of high quality office buildings, after a lull during the real estate crisis, began picking up both in 2011 and 2012.

Using transactions of $5 million or more as a benchmark, CBRE reported slightly more than $1 billion in office transactions in 2012, versus about $1.2 billion in 2011.


The CBRE report said there is an abundant amount of equity capital for retail properties — particularly if they are grocery-anchored.

The retail sector of the San Diego commercial real estate market fundamentals are sound (so far in 2013) and we don’t anticipate any drastic local changes affecting market conditions,” the report said. “Many local and national developers are looking for the next big opportunity in (commercial properties or residential homes for sale in) San Diego.”


Well-located apartment properties, meanwhile, continue to be purchased by REITs (Real Estate Investment Trusts) and other investors — that is, when they are available.

While for purposes of this survey, CBRE only tracked apartment complexes with 100 or more units, it tallied $773 million worth of sales last year, compared with $938 million in 2011, $680 million in 2010 and just $339 million in 2009.

The report stated that the multifamily homes for sale in San Diego should see a modest increase in deal volume in 2013.

“More new product will be delivered starting next year, which may impact rents in some submarkets going forward for the next 18 to 24 months,” the report added. “The market could see a slight decrease in occupancies starting in the second half of 2013 in some submarkets, as the new product is delivered with the majority of new deliveries coming online in late 2013 and early 2014.”

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This is filed under National Markets.

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