Post on 19-Jan-2015
description
transcript
Industrial ReportNorth San Diego County
2nd 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 RATESQ2 2012
Q2 2012 | INDUSTRIAL
CARLSBAD HISTORICAL MARKET TRENDS
9.8%
7.4%
6.2%
14.1%
5.6%
13.5%
0% 5% 10% 15%
North County
Vista
San Marcos
Oceanside
Escondido
Carlsbad
INDUSTRIAL/R&D VACANCY RATES Q2 2012
VISTA HISTORICAL MARKET TRENDS
OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS
Q22012
Q32012 (forecast)
VACANCY
NET ABSORPTION
CONSTRUCTION
RENTAL RATE
LEASE CONCESSIONS
Ocean
Escondido
Oceanside
Vista
San
MarcosCarlsbad
Submarket Buildings Total Inventory Vacant SF Vacancy Rate
Carlsbad 484 14,999,770 2,028,144 13.5%
Escondido 636 7,175,725 402,564 5.6%
Oceanside 394 8,014,725 1,128,279 14.1%
San Marcos 491 8,634,579 534,993 6.2%
Vista 530 13,374,822 987,737 7.4%
Total 2,535 52,199,621 5,081,717 9.8%
OVERVIEWThe 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. 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 sports, life science and technology fi rms. Corporate neighbors include:
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
Q2
Vacancy R
ate
SF (
00
0s)
Net Absorption New Supply Vacancy
NORTH COUNTY HISTORICAL MARKET TRENDS
OVERVIEW
The total vacancy rate for Industrial/R&D product in North
County has dropped below 10% for the fi rst time since
2008, led by Carlsbad with 116k s.f. and Oceanside with
105k s.f. of positive absorption in 2Q 2012. Half way
through the year all fi ve North County submarkets are in
the black and the net absorption has already surpassed the
total for all of 2011. R&D product, which only accounts for
one fi fth of the overall inventory, has recorded more positive
absorption than Industrial in 2012. This is an encouraging
sign for the market considering that R&D has traditionally
lagged behind Industrial.
ACTIVITY
Vista led the charge in another impressive quarter for
leasing activity with 5 transactions totaling 227,000 SF that
included CTDI, Brown Safe, Select Supplements, Electra
Bicycle, and March Plasma. The largest lease deal in 2Q 2012 was Skin Medica’s 81,000 SF expansion and
relocation in Carlsbad. Other signifi cant lease transactions included Crescent Electric in San Marcos and Pillow
Pets in Carlsbad.
Investment sale activity was concentraed in Carlsbad and featured a little bit of everything including a fully
leased property with a partial sale leaseback (2777 Loker Avenue), a 90% vacant REO property (3115 Melrose
Drive), and a tenant in tow transaction (5770 Armada Drive). Owner user sales included Carlsbad Technology,
Inc. at 5928 Farnsworth Court in Carlsbad, Falmat at 1810 Diamond Street in San Marcos, and Buffi ni at 6349
Palomar Oaks Court in Carlsbad.
The only signifi cant land sale in 2Q 2012 was at Bressi Ranch in Carlsbad where Ryan Companies sold 8.0 acres
to a hotel developer for $13.50/SF.
FORECAST
The majority of distressed assets and land have been purged from the system and values are beginning to
reset. Expect vacancy to continue to trend downward in the second half of 2012 as a result of robust demand,
a dwindling inventory, and no new construction underway or in the planned stages. In particular, there were
very few large Industrial/R&D buildings (above 50,000 SF) developed during the last cycle because of high
land prices and construction costs. The result of this and recent absorption is a severe shortage of functional
buildings in this size range. Users with larger requirements or needs for newer, more functional product will
be forced to look towards Build to Suit options at higher rates or multiple locations. For the handful of functional
spaces that remain, look for upward pressure on lease rates and sale prices to move closer to replacement costs.
AT A GLANCE | Q2 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
Half way through 2012 the absorption numbers for Industrial/R&D in Carlsbad are on
pace to surpass those of 2011. R&D product outperformed Industrial for the second
quarter in a row with 161,324 SF of positive absorption, lowering the R&D vacancy
rate by more than two percentage points to 13.87%. The 116,164 SF of overall positive
absorption for Industrial/R&D in Q2 2012 was nearly 10 times that of Q1 and resulted in a
combined vacancy rate of 13.52%, down from 14.41% in Q1 2012.
ACTIVITY
Leasing activity was led by Skin
Medica’s choice to relocate and
expand into 81,712 SF within
the Carlsbad submarket. Other
signifi cant transactions included
Black Box Distribution who
signed a 65,000 SF lease with
BLT Enterprises as part of a sale
leaseback and Pillow Pets who
relocated from Oceanside. Others
including Linear Corporation and
Select Supplements decided to
renew at their current locations.
After a fi rst quarter that saw no sales activity, the market for both Investor and Owner
User sales rebounded aggressively in 2Q 2012. There were three signifi cant investment
sales including a fully leased property with a partial sale leaseback (2777 Loker Avenue),
a 90% vacant bank owned property (3115 Melrose Drive), and a tenant in tow transaction
(5770 Armada Drive). On the owner user side there were four transactions, the largest
of which took place at 5928 Farnsworth Court where Carlsbad Technology, Inc. was
able to buy a 52,000 SF building within walking distance of their current facility in the
Carlsbad Research Center.
FORECAST
With no new construction underway or in the planned stages and a signifi cant amount of
user activity in the market, expect vacancy rates to drop in the second half of 2012. In
particular, larger users above 75,000 SF face an acute shortage of options. As a result
of this lack of supply there has been an increase in Build to Suit inquiries. However,
lease rates and sale prices for new product based on land and construction costs are
still considerably higher than existing product. Expect a slight uptick in rents for existing
inventory due to these constraints.
MARKET INDICATORS
INDUSTRIAL/R&D VACANCY RATESQ2 2012
Q2 2012 | INDUSTRIAL
CARLSBAD HISTORICAL MARKET TRENDS
9.8%
7.4%
6.2%
14.1%
5.6%
13.5%
0% 5% 10% 15%
North County
Vista
San Marcos
Oceanside
Escondido
Carlsbad
INDUSTRIAL/R&D VACANCY RATES Q2 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
Q2
Vacancy R
ate
SF (
00
0s)
Net Absorption New Supply Vacancy
CARLSBAD HISTORICAL MARKET TRENDS INDUSTRIAL/R&D VACANCY RATES Q2 2012
VISTA HISTORICAL MARKET TRENDS
OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS
Ocean
Oceanside
Vista
SanMarcosCarlsbad
Q22012
Q32012 (forecast)
VACANCY
NET ABSORPTION
CONSTRUCTION
RENTAL RATE
LEASE CONCESSIONS
CARLSBADAT A GLANCE
Carlsbad
# PROPERTY NAME/ADDRESS BUYER TYPE SIZE SF SALE PRICE PRICE/SF
1 2777 Loker Avenue Investor 123,454 $11,500,000 $93.15
2 3115 Melrose Drive Investor 103,547 $8,725,000 $84.26
3 5770 Armada Drive Investor 81,712 $15,600,000 $190.91
4 5928 Farnsworth Court Owner User 52,853 $4,670,453 $88.36
5 6349 Palomar Oaks Court Owner User 27,262 $2,990,000 $109.68
6 1911 Palomar Oaks Way Owner User 23,325 $2,654,000 $113.78
7 5816 Dryden Place Owner User 22,156 $1,713,168 $77.32
# PROPERTY NAME/ADDRESS TENANT NAME SIZE SF TERM EFF RATE/SF
8 5770 Armada Drive Skin Medica 81,712 180 months Confidential
9 2777 Loker Avenue BlackBox Distribution 65,412 36 months $0.69 NNN
10 1950 Camino Vida Roble Linear Corp. (renewal) 50,000 72 months $0.95 NNN
11 2045 Corte del Nogal Pillow Pets 36,404 36 months Confidential
12 5800 Newton Drive Select Supplements (renewal) 28,857 60 months $0.79 NNN
13 5817 Dryden Place Weston Solutions 18,760 60 months $0.98 NNN
SALES ACTIVITY
LEASING ACTIVITY
TRANSACTION ACTIVITY - Q2 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
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
Sy
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
7
8
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 | Q2 2012 | INDUSTRIAL | CARLSBAD
www.colliers.com/carlsbad
OVERVIEW
The Escondido Industrial market continues to rebound strongly from the turbulent last
few years. The industrial market boasts the lowest vacancy in all North County Cities and
it will continue its streak of three consecutive years of positive absorption. The vacancy
rate peaked in 2009 at 9%, and now is at a healthy 5.6% vacancy rate. Sales prices
have begun to climb for smaller buildings (less than 10k sf), and prices have stabilized
for larger buildings. Lease rates remain low but should begin to climb as the low supply
begins to eff ect the increased demand.
Regarding signifi cant developments
in Escondido: The Palomar
Pomerado Hospital is near
completion and we should begin to
see the Escondido Research and
Technology Center attract medical
tenants and supporting distribution
and manufacturing companies.
The Nordahl off -ramp and bridge
are being widened, as the hospital
infrastructure money is allocated
for infrastructure expense around
Escondido, which will improve
access for industrial tenants and truck routes. Also, Haman construction will begin
construction on the ~100,000 sf building for Cor-O-van, and Stone Brewery is working
on hotel drawings for submittal to the City.
ACTIVITY
There was more than 30 Escondido Industrial lease transactions in 2Q, with the majority of
activity occurring in the multi-tenant parks in sizes ranging from 1,000 sf to 4,000sf. There
were only four lease transactions over 10,000 sf, two of these were more than 20,000 sf.
These two larger tenants consisted of GP Strategies leasing the Decratek building on Progress
Place and VIT Products leasing 2344 Auto Parkway. Coincidently, the larger and smaller
tenants average lease rates have stabilized at approximately $.65 modifi ed gross.
The Sale transactions were also in the smaller range with three sales less than 6,000 sf, with
an average price of approximately $103 psf. There was a 10,000 sf short sale at $89 psf on
Engle as well as a 7,100 sf building on 2.44 acres of land that closed for $1.7M
FORECAST
The Escondido industrial market, which has historically been catagorized as a “mom and pop”
small building market is now beginning to get recognized as a potential destination for quality
tenants along the I-15 corridor. Moreover, it also surrounds a state-of-the-art and the newest
hospital in the nation, which will bring national attention to the city.
MARKET INDICATORS
INDUSTRIAL/R&D VACANCY RATESQ1 2012
Q2 2012 | INDUSTRIAL
CARLSBAD HISTORICAL MARKET TRENDS
9.8%
7.4%
6.2%
14.1%
5.6%
13.5%
0% 5% 10% 15%
North County
Vista
San Marcos
Oceanside
Escondido
Carlsbad
INDUSTRIAL/R&D VACANCY RATES Q2 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
Q2
Vacancy R
ate
SF (
00
0s)
Net Absorption New Supply Vacancy
ESCONDIDO HISTORICAL MARKET TRENDS NORTH COUNTY NET ABSORPTION TRENDS
5-Yr. Avg. = 91,368 SF
NORTH COUNTY HISTORICAL MARKET TRENDS
Ocean
SanMarcos
Oceanside
Vista
Escondido
Carlsbad
Q22012
Q32012 (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 Ave
Washington Avenue
Washington Avenue
Tulip
St
Mission Avenue
Mission Avenue
Esco
ndid
o A
ve
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 2835 Progres Place GP Strategies 23,827 65 Months $0.68 NNN
SALES ACTIVITY
LEASING ACTIVITY
TRANSACTION ACTIVITY - Q2 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 | Q2 2012 | INDUSTRIAL | ESCONDIDO
www.colliers.com/carlsbad
OVERVIEW
Oceanside continues to maintain the highest vacancy in North County at 14.08%.
However, the 105,017 SF of positive net absorption during Q2 2012 added to the 115,069
SF in Q1 brings the brings the midyear total of space sold and leased 220,086 SF. This
activity has reduced the vacancy from 17.10% to its current level which is a reduction of
3.02% in 6 months. There is now approximately 1.1m SF of vacant industrial space in the
market.
ACTIVITY
Industrial The activity in the
market is picking up. More
tenants and buyers are touring
the market than in previous
quarters. Some properties
have been receiving multiple
off ers to buy and lease which
has allowed owners to be
more selective in negotiating
transactions. In addition,
there are several large users
in the market looking at
existing spaces and comparing
those with Build To Suit
opportunities.
There was only one Industrial building sale that closed escrow in Q2. It was a 14,177 SF
bank owned property located at 417 Via Del Monte in the Oceanside Airport area.
Lease activity was excellent in the smaller multi-tenant projects with both new
transactions and lease renewals. The smaller tenants returning to the market is a good
sign that a broader based recovery is underway despite the challenges with the overall
unemployment rate in San Diego and the State. DiMaggio Maintenance signed a 5 year
lease for 10,000 SF at 3310 Via de la Valle.
FORECAST
Oceanside occupancy will be hurt in second half of the year as Genica recently
announced it would be relocating out of 145,000 SF in two buildings in the Prescott
Industrial park and relocating to a 160,000 SF facility they purchased in Temecula. The
property owners and the City of Oceanside worked hard to keep them but Genica was
able to acquire a larger building at a very attractive price and consolidate under one
roof. This increased their effi ciency and lowered operating costs. There are a handful of
buildings in escrow now in Oceanside. We are optimistic this activity will help shore up
occupancy to off set the Genica loss.
MARKET INDICATORS
INDUSTRIAL/R&D VACANCY RATESQ2 2012
Q2 2012 | INDUSTRIAL
CARLSBAD HISTORICAL MARKET TRENDS
9.8%
7.4%
6.2%
14.1%
5.6%
13.5%
0% 5% 10% 15%
North County
Vista
San Marcos
Oceanside
Escondido
Carlsbad
INDUSTRIAL/R&D VACANCY RATES Q2 2012
VISTA HISTORICAL MARKET TRENDS
OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS
CARLSBAD HISTORICAL MARKET TRENDS INDUSTRIAL/R&D VACANCY RATES Q2 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
Q2
Vacancy R
ate
SF (
00
0s)
Net Absorption New Supply Vacancy
OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS Ocean
Oceanside
Vista
SanMarcosCarlsbad
Q22012
Q32012 (forecast)
VACANCY
NET ABSORPTION
CONSTRUCTION
RENTAL RATE
LEASE CONCESSIONS
OCEANSIDEAT A GLANCE
Oceanside
# PROPERTY NAME/ADDRESS BUYER TYPE SIZE (SF) SALE PRICE PRICE/SF
1 417 Via Del Monte Lola Gouge 14,177 $1,116,000 $78.72
# PROPERTY NAME/ADDRESS TENANT NAME SIZE (SF) TERM EFF RATE/SF
2 3310 Via de la Valle DiMaggio Maintenance 10,000 60 months $0.58/G
SALES ACTIVITY
LEASING ACTIVITY
TRANSACTION ACTIVITY - Q2 2012
AT A GLANCE | Q2 2012 | 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
San Marcos posted its fourth consecutive quarter of positive net absorption bringing
industrial vacancy to 6.2%, which is down from 6.9% at the end of Q1 and near the lowest
in North County. Low vacancy and positive absorption has helped stabilize lease and sale
prices and positioned San Marcos for rent and price growth. The San Marcos industrial
market is comprised on 491 buildings totaling 8.6 Million square feet with an average
building size of 17,000 square feet.
ACTIVITY
The majority of activity during Q2
occurred in the smaller spaces with
the average transaction size of 6,000
square feet and average lease rate of
$.68/SF Gross. Crescent Electric’s
lease of 30,000 square feet at 295
Distribution Street was the only lease
transaction completed above 10,000
square feet. With the completion of
this transaction there are only six
available spaces larger than 20,000
square feet in the entire San Marcos
submarket. Falmat purchased a
48,000 square foot building they had been leasing at 1810 Diamond for $88/SF. Action
Auto Collision purchased 9,216 square feet on Rancheros for $102/SF.
The City has drafted an updated industrial zoning ordinance to coincide with the General
Plan that was adopted in February 2012. The new zoning designations are now consistent
with the General Plan and the code better defi nes allowable uses. The draft code can be
viewed at http://www.ourcityourfuture.com/working-documents. Additionally, construction
is near complete on the fi rst phase of student housing located in the University District. The
University District is entitled to provide the following uses:
1 Million square feet of street level and big box retail
950,000 SF of professional/medical offi ce
2,600 residential housing units
800 student housing units
FORECAST
San Marcos is a supply constrained market that will see rate and price appreciation as a
result of continued demand. Owner-users and developers alike will have to look to vacant
land to satisfy the need for larger blocks of space in San Marcos.
MARKET INDICATORS
INDUSTRIAL/R&D VACANCY RATESQ2 2012
Q2 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 TRENDS INDUSTRIAL/R&D VACANCY RATES Q2 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
Q2
Vacancy R
ate
SF (
00
0s)
Net Absorption New Supply Vacancy
SAN MARCOS HISTORICAL MARKET TRENDS
Ocean
Oceanside
Vista
SanMarcos
Escondido
Carlsbad
Q22012
Q32012 (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 1810 Diamond Street Owner User 48,298 $4,250,000 $88.00
2 923 Rancheros Owner User 9,216 $945,000 $102.54
# PROPERTY NAME/ADDRESS TENANT NAME SIZE SF TERM EFF RATE/SF
3 295 Distribution Street Crescent Electric Supply 30,140 72 months $0.50 NNN
4 1020 Linda Vista Drive Ste B John Hargrove 7,040 60 months $0.60 GRS
5 1365 Grand Ave #100-104 Rampage Brewing Company 6,770 60 months $0.93 GRS
6 220 Bingham Drive #101 World Mission Society Church 6,329 24 months $0.63 GRS
SALES ACTIVITY
LEASING ACTIVITY
TRANSACTION ACTIVITY - Q2 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 | Q2 2012 | INDUSTRIAL | SAN MARCOS
www.colliers.com/carlsbad
OVERVIEW
A surge in Q2 tenant activity helps Vista cut its vacancy rate from to 8.1% to 7.39%. Five
leases totaling 227,000 square feet of gross absorption accounted for the majority of Q2
activity and resulted in 75,000 square feet of net absorption. The Vista industrial market
is comprised of 530 buildings totaling 13 million square feet with an average building size
of 25,000 square feet.
ACTIVITY
Vista’s leasing activity surpassed all other North County submarkets. Brown Safe led the
way by leasing 65,000 square feet from real estate investment fi rm Pacifi ca Enterprises,
Inc., who purchased the building vacant for $58/SF only three months earlier.
Communications Test Design, Inc. (59K), Select Supplements (39K) and March Plasma
(24K) all expanded or relocated from Carlsbad, while Electra Bicycle, an existing Vista
tenant, expanded into 39,000 square feet. Lease rates during Q2 averaged $.55/SF NNN.
Vista is benefi ted from limited supply in San Marcos and higher prices in Carlsbad. Even
though Q2 saw an increase in activity there is still a surplus of space available, 11 spaces
to be exact, between 30-50,000 square feet.
FORECAST
Lease rates in the 30-50,000 square foot range will remain fl at until occupancy
increases, while spaces outside this size range could see more immediate rate increases.
The recent trend of tenant migration from neighboring cities will likely continue as it
becomes increasingly diffi cult to fi nd space and/or match the value Vista off ers. There
has been an increase in build-to-suit inquires from tenants seeking space greater than
50,000 square feet due to lack of available options in North County. We expect pricing on
good quality larger buildings to move closer to replacement cost.
MARKET INDICATORS
INDUSTRIAL/R&D VACANCY RATESQ2 2012
Q2 2012 | INDUSTRIAL
CARLSBAD HISTORICAL MARKET TRENDS
9.8%
7.4%
6.2%
14.1%
5.6%
13.5%
0% 5% 10% 15%
North County
Vista
San Marcos
Oceanside
Escondido
Carlsbad
INDUSTRIAL/R&D VACANCY RATES Q2 2012
VISTA HISTORICAL MARKET TRENDS
OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS
CARLSBAD HISTORICAL MARKET TRENDS INDUSTRIAL/R&D VACANCY RATES Q2 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
Q2
Vacancy R
ate
SF (
00
0s)
Net Absorption New Supply Vacancy
VISTA HISTORICAL MARKET TRENDS
OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS
Q22012
Q32012 (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 2510 Pioneer Avenue Owner User 13,140 $1,025,000 $78.01
Only one sale above 10,000 SF occurred during Q2
# PROPERTY NAME/ADDRESS TENANT NAME SIZE SF TERM EFF RATE/SF
2 1081 Poinsettia Avenue Brown Safe Mfg 65,002 92 months $0.62 NNN
3 995 Joshua Way Ste A CTDI 59,144 36 months $0.51 NNN
4 2390 Oak Ridge Way Select Supplements 39,672 72 months undisclosed
5 3275 Corporate View Drive Electra Bicycle 38,808 60 months $0.61 NNN
6 2370 Oak Ridge Way Ste B March Plasma Systems, Inc. 24,592 60 months $0.54 NNN
TRANSACTION ACTIVITY - Q2 2012
SALES ACTIVITY
LEASING ACTIVITY
Sycamore Ave
Sycamore Ave
Syc
amor
e Ave
Oleander Ave
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 AveLionshead 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
AT A GLANCE | Q2 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 2012Q2
Vaca
ncy
Rate
SF (M
illio
ns)
Net Absorption New Supply Vacancy
NEW SUPPLY, ABSORPTION AND VACANCY RATES
8.0%
9.5%
9.0%
9.1%
18.5%
11.0%
13.8%
14.0%
0% 5% 10% 15% 20%
I-15 Corridor
North County
Central County
S.D. County
R&D Industrial
INDUSTRIAL VACANCY RATES Q2 2012
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
$ /
SF /
Mon
th (N
NN
)
Industrial R&D Combined
HISTORICAL RENTAL RATE TRENDS Industrial, R&D and Combined Rates Quarterly Average Asking Rate Per SF Per Month (NNN)
45.0%
29.8%
14.3% 5.9%
5.0% <= 2,000 SF [243]
2,001 - 5,000 SF [161]
5,001 - 10,000 SF [77]
10,001 - 20,000 SF [32]
>= 20,001 SF [27]
INDUSTRIAL LEASING ACTIVITY BY TENANT SIZE Percentage of Total Leases Completed in Q2 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 2012Q2
Vaca
ncy
Rate
SF (M
illio
ns)
Net Absorption New Supply Vacancy
NEW SUPPLY, ABSORPTION AND VACANCY RATES
8.0%
9.5%
9.0%
9.1%
18.5%
11.0%
13.8%
14.0%
0% 5% 10% 15% 20%
I-15 Corridor
North County
Central County
S.D. County
R&D Industrial
INDUSTRIAL VACANCY RATES Q2 2012
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
$ /
SF /
Mon
th (N
NN
)
Industrial R&D Combined
HISTORICAL RENTAL RATE TRENDS Industrial, R&D and Combined Rates Quarterly Average Asking Rate Per SF Per Month (NNN)
45.0%
29.8%
14.3% 5.9%
5.0% <= 2,000 SF [243]
2,001 - 5,000 SF [161]
5,001 - 10,000 SF [77]
10,001 - 20,000 SF [32]
>= 20,001 SF [27]
INDUSTRIAL LEASING ACTIVITY BY TENANT SIZE Percentage of Total Leases Completed in Q2 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/month range. The Q2 2012 average rate of $0.83/SF/month is still 16% less than the historical high.
lEASING ActIVItY
around 540 leases were completed in Q2 2012, totaling approximately 3.2 million SF. 89% of all leases were 10,000 SF or less, while only 11% of all leases were over 10,000 SF in size. Smaller tenants made up a larger proportion of all leases signed in Q2 and had a 13% increase in deal volume over Q1.
www.colliers.com/sandiego
maRKET REpORTSAN DIEGO cOUNtY
www.colliers.com/sandiego
Industrial market posts stellar absorption in Q2 Positive demand seen in almost every submarket
MArKEt OVErVIEW San Diego County’s industrial/R&D continued its fourth straight quarter of positive demand with an outstanding 1.16 million SF of net absorption. The first of this year posted over 1.83 million
SF of net absorption which beat out the last half of 2010 which posted nearly 1.7 million SF. Robust leasing activity in Q3 and Q4 last year led to increased occupancies in Q1 and Q2 this year. Leasing activity continued to be strong in the first half of the year which should equate to
continued substantial net absorption for the last six months of the year. net absorption for 2012 will likely be between 2.2 and 2.6 million SF with vacancy standing between 10.1% and 10.3%.
The may 2012 San Diego County unemployment rate measured 8.8%, exhibiting no change from april. The California unemployment rate decreased (-0.1%) in may and stood at 10.4% while the national rate increased (+0.2%) to 7.9%. as of may 2012, San Diego County experienced a year-over-year increase in non-farm employment totaling 13,400 jobs. The combined industry sectors of “Trade, Transportation, and Utilities” and “manufacturing” – the two predominant industrial-utilizing employment sectors – posted a net increase of 1,600 jobs over the same period.
in march, 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 fifth consecutive month of
increases that was driven primarily by significant gains in local consumer confidence and
decreased initial claims for unemployment insurance. initial claims for unemployment insurance have decreased for seven consecutive months. Help wanted advertising has had 16 months of consistent growth.
MArKEt trENDS
massive positive demand drove countywide net absorption to nearly 1.2 million SF in Q2 and 1.8 million SF year-to-date. in 2012, net absorption is trending toward exceeding 2 million SF, making it potentially the best year for demand since 2006. no new construction was completed in Q2 but nearly 130,000 SF will be completed for the year. Vacancy stood at 10.5% and will settle near 10% by year-end.
MArKEt INDIcAtOrS
INDUStrIAl VAcANcY rAtESQ2 2012
Q2 2012 Q3 2012 (P)
VAcANcY
NEt ABSOrPtION
cONStrUctION
rENtAl rAtE
Q2 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 2012Q2
Vaca
ncy
Rate
SF (M
illio
ns)
Net Absorption New Supply Vacancy
NEW SUPPLY, ABSORPTION AND VACANCY RATES
8.0%
9.5%
9.0%
9.1%
18.5%
11.0%
13.8%
14.0%
0% 5% 10% 15% 20%
I-15 Corridor
North County
Central County
S.D. County
R&D Industrial
INDUSTRIAL VACANCY RATES Q2 2012
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
$ /
SF /
Mon
th (N
NN
)
Industrial R&D Combined
HISTORICAL RENTAL RATE TRENDS Industrial, R&D and Combined Rates Quarterly Average Asking Rate Per SF Per Month (NNN)
45.0%
29.8%
14.3% 5.9%
5.0% <= 2,000 SF [243]
2,001 - 5,000 SF [161]
5,001 - 10,000 SF [77]
10,001 - 20,000 SF [32]
>= 20,001 SF [27]
INDUSTRIAL LEASING ACTIVITY BY TENANT SIZE Percentage of Total Leases Completed in Q2 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 2012Q2
Vaca
ncy
Rate
SF (M
illio
ns)
Net Absorption New Supply Vacancy
NEW SUPPLY, ABSORPTION AND VACANCY RATES
8.0%
9.5%
9.0%
9.1%
18.5%
11.0%
13.8%
14.0%
0% 5% 10% 15% 20%
I-15 Corridor
North County
Central County
S.D. County
R&D Industrial
INDUSTRIAL VACANCY RATES Q2 2012
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
$ /
SF /
Mon
th (N
NN
)
Industrial R&D Combined
HISTORICAL RENTAL RATE TRENDS Industrial, R&D and Combined Rates Quarterly Average Asking Rate Per SF Per Month (NNN)
45.0%
29.8%
14.3% 5.9%
5.0% <= 2,000 SF [243]
2,001 - 5,000 SF [161]
5,001 - 10,000 SF [77]
10,001 - 20,000 SF [32]
>= 20,001 SF [27]
INDUSTRIAL LEASING ACTIVITY BY TENANT SIZE Percentage of Total Leases Completed in Q2 2012
inched down by 17 basis points to 0.5% in Q2 making it the lowest rate recorded by Colliers since tracking started twelve years ago. This sublease vacancy rate equated to space of nearly 956,000 SF countywide.
Vacancy has tended to remain stable in the 11%-12% range for almost three years, in part due to comparable levels of new construction (supply) and net absorption (demand). However, the Q2 drop to 10.5% is the first time vacancy has been
below 11% since Q2 2009. Even conservative estimates of demand should place vacancy in the low-10% range by year-end and in the mid-9% range a year from now.
NEW SUPPlY no new construction has been completed year-to-date although 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 7.88 million SF with 69% of this space concentrated in just four submarkets: Otay mesa, Carlsbad, East County and Oceanside. Even with increasing demand, the majority of immediate to mid-term future development will be concentrated in build-to-suits.
512 offices in 61 countries on 6 continentsUnited States: 125Canada: 38Latin america: 18Asia Pacific: 214
EmEa: 117
• $59.6 billion in annual transactions
• 1.0 billion square feet under management
• Over 12,500 professionals
MARKET REPORT | Q2 2012 | INDUSTRIAL | SAN DIEGO COUNTY
SAN DIEGO cOUNtY
The San Diego County industrial/R&D market is comprised of 188.3 million SF 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 submar-kets of the Central County market. industrial buildings (including manufac-turing, 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
6122-6126 Nancy Ridge Drive Sorrento Mesa R&D 68,000 $20,000,000 $294
2777 Loker Avenue W. Carlsbad Industrial 123,454 $11,500,000 $93
Centerpointe Tech Center Miramar R&D 152,745 $10,150,000 $66
11011 Torreyana Road Torrey Pines R&D 76,694 $10,000,000 $130
8851-8877 Kerns Street Otay Mesa Industrial 115,290 $5,722,500 $50
PROPERTY NAME/ADDRESS SUBMARKET TYPE SIZE SF
9043 Siempre Viva Road Otay Mesa Industrial 257,972 Imperial Toy
8409 Kerns Street Otay Mesa Industrial 124,068 Pacific World Corporation
1081 Poinsettia Avenue Carlsbad Industrial 65,002
1601 Precision Park Lane South Bay Industrial 61,502
10275 Science Center Drive Torrey Pines R&D 43,159 Takeda San Diego
TRANSACTION ACTIVITY - Q2 2012
SALES ACTIVITY
LEASING ACTIVITY
Palletas Y Mas
TENANT NAME
Brown Safe Manufacturing
NEt ABSOrPtION Q2 combined industrial/R&D net absorption totaled a positive 1.16 million SF. nearly every single submarket recorded positive net absorption with Otay mesa leading the pack with nearly 40% of all of the square footage. Countywide net absorption for industrial space (manufacturing, warehouse, distribution, and multi-tenant/incubator building uses) totaled a positive 718,012 SF and R&D space (flex, wet lab and corporate headquarters building uses) totaled a positive 440,927 SF.
increased absorption activity for smaller tenants less than 10,000 SF continued into Q2. new leasing activity during the quarter was up 12% which should bode well for absorption in the latter half of the year. additionally, many large leases pending occupancy in the next two quarters will add to significant absorption for the year. This could
likely put absorption in 2012 to over 2 million SF – a level of demand not seen since 2006.
positive net absorption was recorded in 17 of the 21 San Diego County submarkets. Such demand spread out throughout the county is what drove positive net absorption to such a high level in Q2. However, there were some notable submarkets such as Otay mesa which led the pack with 442,549 SF
– or 38% of the net absorption countywide. Other strong markets included Campus point/Eastgate (+106,369 SF) and Oceanside (+105,017 SF).
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 six quarters, the rent has settled in the low-$0.80 range and stood at $0.83/SF/month in Q2 2012. During Q2, nearly all submarkets either had minimal increases in the asking rent or they remained unchanged. The north County and i-15 Corridor markets had no change in asking rents while the Central County average increased by $0.02 to end the quarter at $0.81/SF/month.
VAcANcY The overall vacancy rate decreased by 75 basis points in Q2, settling in at 10.5%. The industrial and R&D vacancy components measured 9.1% and 14.0%, respectively. Compared to one year ago, R&D vacancy has increased by 81 basis points (14.8% in Q2 2011) while industrial vacancy has decreased by 99 basis points (10.0% in Q2 2011).
The Q2 2012 combined industrial/R&D direct vacancy rate decreased to 10.0% compared to 10.6% at the end of Q1. The sublease vacancy
NORTH COUNTYI-15 CORRIDORCENTRAL COUNTYDOWNTOWNSOUTH BAY/EAST COUNTY
NORTh cOUNTy
I-15 cORRIDOR
McAS MIRAMAR
cENTRALcOUNTy
cOllIErS INtErNAtIONAl | P. 3
MARKET REPORT | Q2 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 3,052 81,865,813 8.7% 0.2% 9.0% 9.9% 568,806 856,122 0 0 2,361,960 $0.64North County 2,189 40,194,582 9.3% 0.2% 9.5% 10.1% 208,034 302,554 0 0 1,449,951 $0.69I-15 Corridor 302 10,570,385 7.5% 0.4% 8.0% 7.4% (58,828) (41,506) 0 129,845 382,900 $0.87TOTAL 5,543 132,630,780 8.8% 0.2% 9.1% 9.7% 718,012 1,117,170 0 129,845 4,194,811 $0.68R&D TOTALS BY MARKET Flex, wet lab and corporate headquartersCentral County 822 34,338,583 12.2% 1.6% 13.8% 14.8% 280,387 380,617 0 123,400 1,622,724 $1.16North County 346 12,005,039 10.8% 0.2% 11.0% 12.6% 167,940 261,395 0 0 1,458,474 $1.08I-15 Corridor 134 9,331,288 17.7% 0.9% 18.5% 18.5% (7,400) 70,668 0 0 605,000 $1.01TOTAL 1,302 55,674,910 12.8% 1.2% 14.0% 14.9% 440,927 712,680 0 123,400 3,686,198 $1.10COMBINED INDUSTRIAL / R&D BY MARKET AND SUBMARKETCentral CountyAirport / SA 76 1,888,166 5.3% 0.0% 5.3% 3.8% (26,949) (66,919) 0 0 0 $0.91Campus Pt / Egate 42 4,065,514 14.6% 7.8% 22.4% 27.4% 106,369 59,676 0 123,400 601,967 $2.25Central San Diego 397 8,377,286 4.9% 0.0% 4.9% 5.5% (6,857) 5,712 0 0 0 $0.81East County 604 14,165,043 7.4% 0.1% 7.4% 8.1% 74,965 76,848 0 0 1,229,000 $0.66Kearny Mesa 650 17,391,882 5.1% 0.4% 5.5% 6.0% 69,848 148,392 0 0 65,691 $1.01Miramar 583 13,758,699 10.2% 0.3% 10.5% 10.8% (18,860) 115,500 0 0 0 $0.88Mission Gorge / Vly 95 2,273,798 8.6% 2.7% 11.3% 13.1% 40,871 42,190 0 0 0 $0.82Otay Mesa 294 14,645,578 18.1% 0.7% 18.8% 22.5% 442,549 567,864 0 0 1,619,960 $0.48Rose Cyn / Morena 189 4,140,283 6.7% 0.0% 6.7% 5.8% 44,570 48,572 0 0 0 $0.75Sorrento Mesa 273 13,496,370 13.4% 0.3% 13.6% 13.5% 14,113 103,658 0 0 229,136 $1.09Sorrento Valley 106 3,411,905 8.6% 1.8% 10.4% 11.4% 46,699 49,546 0 0 0 $1.39South Bay 498 13,557,015 7.0% 0.1% 7.1% 7.4% 47,691 42,857 0 0 0 $0.58Torrey Pines 67 5,032,857 14.9% 0.5% 15.4% 15.7% 14,184 42,843 0 0 238,930 N/ATOTAL 3,874 116,204,396 9.8% 0.6% 10.4% 11.3% 849,193 1,236,739 0 123,400 3,984,684 $0.81North CountyCarlsbad 484 14,999,770 13.7% 0.1% 13.9% 14.4% 63,687 108,030 0 0 1,357,132 $0.98Escondido 636 7,175,725 5.4% 0.2% 5.6% 6.5% 70,473 30,912 0 0 39,500 $0.72Oceanside 394 8,014,725 13.8% 0.2% 14.1% 15.5% 105,017 220,086 0 0 1,227,361 $0.63San Marcos 491 8,634,579 5.9% 0.3% 6.2% 6.9% 61,468 97,165 0 0 53,000 $0.92Vista 530 13,374,822 7.3% 0.1% 7.4% 8.1% 75,329 107,756 0 0 231,432 $0.68TOTAL 2,535 52,199,621 9.7% 0.2% 9.8% 10.6% 375,974 563,949 0 0 2,908,425 $0.79I-15 CorridorPoway 215 8,196,473 4.5% 0.5% 5.0% 5.1% 7,087 (24,770) 0 129,845 447,900 $0.79Rancho Bernardo 146 9,559,699 17.2% 0.0% 17.2% 16.4% (75,421) 71,875 0 0 0 $1.01Scripps Ranch 75 2,145,501 20.5% 3.8% 24.3% 24.4% 2,106 (17,943) 0 0 540,000 $0.96TOTAL 436 19,901,673 12.3% 0.6% 12.9% 12.6% (66,228) 29,162 0 129,845 987,900 $0.95SAN DIEGO COUNTY COMBINED INDUSTRIAL / R&DTOTAL 6,845 188,305,690 10.0% 0.5% 10.5% 11.3% 1,158,939 1,829,850 0 253,245 7,881,009 $0.83QUARTERLY COMPARISONQ2 2012 6,845 188,305,690 10.0% 0.5% 10.5% 11.3% 1,158,939 1,829,850 0 253,245 7,881,009 $0.83Q1 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 $0.81
* 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
Q2 2012
P. 2 | cOllIErS INtErNAtIONAl
MARKET REPORT | Q2 2012 | INDUSTRIAL | SAN DIEGO COUNTY
SAN DIEGO cOUNtY
The San Diego County industrial/R&D market is comprised of 188.3 million SF 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 submar-kets of the Central County market. industrial buildings (including manufac-turing, 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
6122-6126 Nancy Ridge Drive Sorrento Mesa R&D 68,000 $20,000,000 $294
2777 Loker Avenue W. Carlsbad Industrial 123,454 $11,500,000 $93
Centerpointe Tech Center Miramar R&D 152,745 $10,150,000 $66
11011 Torreyana Road Torrey Pines R&D 76,694 $10,000,000 $130
8851-8877 Kerns Street Otay Mesa Industrial 115,290 $5,722,500 $50
PROPERTY NAME/ADDRESS SUBMARKET TYPE SIZE SF
9043 Siempre Viva Road Otay Mesa Industrial 257,972 Imperial Toy
8409 Kerns Street Otay Mesa Industrial 124,068 Pacific World Corporation
1081 Poinsettia Avenue Carlsbad Industrial 65,002
1601 Precision Park Lane South Bay Industrial 61,502
10275 Science Center Drive Torrey Pines R&D 43,159 Takeda San Diego
TRANSACTION ACTIVITY - Q2 2012
SALES ACTIVITY
LEASING ACTIVITY
Palletas Y Mas
TENANT NAME
Brown Safe Manufacturing
NEt ABSOrPtION Q2 combined industrial/R&D net absorption totaled a positive 1.16 million SF. nearly every single submarket recorded positive net absorption with Otay mesa leading the pack with nearly 40% of all of the square footage. Countywide net absorption for industrial space (manufacturing, warehouse, distribution, and multi-tenant/incubator building uses) totaled a positive 718,012 SF and R&D space (flex, wet lab and corporate headquarters building uses) totaled a positive 440,927 SF.
increased absorption activity for smaller tenants less than 10,000 SF continued into Q2. new leasing activity during the quarter was up 12% which should bode well for absorption in the latter half of the year. additionally, many large leases pending occupancy in the next two quarters will add to significant absorption for the year. This could
likely put absorption in 2012 to over 2 million SF – a level of demand not seen since 2006.
positive net absorption was recorded in 17 of the 21 San Diego County submarkets. Such demand spread out throughout the county is what drove positive net absorption to such a high level in Q2. However, there were some notable submarkets such as Otay mesa which led the pack with 442,549 SF
– or 38% of the net absorption countywide. Other strong markets included Campus point/Eastgate (+106,369 SF) and Oceanside (+105,017 SF).
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 six quarters, the rent has settled in the low-$0.80 range and stood at $0.83/SF/month in Q2 2012. During Q2, nearly all submarkets either had minimal increases in the asking rent or they remained unchanged. The north County and i-15 Corridor markets had no change in asking rents while the Central County average increased by $0.02 to end the quarter at $0.81/SF/month.
VAcANcY The overall vacancy rate decreased by 75 basis points in Q2, settling in at 10.5%. The industrial and R&D vacancy components measured 9.1% and 14.0%, respectively. Compared to one year ago, R&D vacancy has increased by 81 basis points (14.8% in Q2 2011) while industrial vacancy has decreased by 99 basis points (10.0% in Q2 2011).
The Q2 2012 combined industrial/R&D direct vacancy rate decreased to 10.0% compared to 10.6% at the end of Q1. The sublease vacancy
NORTH COUNTYI-15 CORRIDORCENTRAL COUNTYDOWNTOWNSOUTH BAY/EAST COUNTY
NORTh cOUNTy
I-15 cORRIDOR
McAS MIRAMAR
cENTRALcOUNTy
cOllIErS INtErNAtIONAl | P. 3
MARKET REPORT | Q2 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 3,052 81,865,813 8.7% 0.2% 9.0% 9.9% 568,806 856,122 0 0 2,361,960 $0.64North County 2,189 40,194,582 9.3% 0.2% 9.5% 10.1% 208,034 302,554 0 0 1,449,951 $0.69I-15 Corridor 302 10,570,385 7.5% 0.4% 8.0% 7.4% (58,828) (41,506) 0 129,845 382,900 $0.87TOTAL 5,543 132,630,780 8.8% 0.2% 9.1% 9.7% 718,012 1,117,170 0 129,845 4,194,811 $0.68R&D TOTALS BY MARKET Flex, wet lab and corporate headquartersCentral County 822 34,338,583 12.2% 1.6% 13.8% 14.8% 280,387 380,617 0 123,400 1,622,724 $1.16North County 346 12,005,039 10.8% 0.2% 11.0% 12.6% 167,940 261,395 0 0 1,458,474 $1.08I-15 Corridor 134 9,331,288 17.7% 0.9% 18.5% 18.5% (7,400) 70,668 0 0 605,000 $1.01TOTAL 1,302 55,674,910 12.8% 1.2% 14.0% 14.9% 440,927 712,680 0 123,400 3,686,198 $1.10COMBINED INDUSTRIAL / R&D BY MARKET AND SUBMARKETCentral CountyAirport / SA 76 1,888,166 5.3% 0.0% 5.3% 3.8% (26,949) (66,919) 0 0 0 $0.91Campus Pt / Egate 42 4,065,514 14.6% 7.8% 22.4% 27.4% 106,369 59,676 0 123,400 601,967 $2.25Central San Diego 397 8,377,286 4.9% 0.0% 4.9% 5.5% (6,857) 5,712 0 0 0 $0.81East County 604 14,165,043 7.4% 0.1% 7.4% 8.1% 74,965 76,848 0 0 1,229,000 $0.66Kearny Mesa 650 17,391,882 5.1% 0.4% 5.5% 6.0% 69,848 148,392 0 0 65,691 $1.01Miramar 583 13,758,699 10.2% 0.3% 10.5% 10.8% (18,860) 115,500 0 0 0 $0.88Mission Gorge / Vly 95 2,273,798 8.6% 2.7% 11.3% 13.1% 40,871 42,190 0 0 0 $0.82Otay Mesa 294 14,645,578 18.1% 0.7% 18.8% 22.5% 442,549 567,864 0 0 1,619,960 $0.48Rose Cyn / Morena 189 4,140,283 6.7% 0.0% 6.7% 5.8% 44,570 48,572 0 0 0 $0.75Sorrento Mesa 273 13,496,370 13.4% 0.3% 13.6% 13.5% 14,113 103,658 0 0 229,136 $1.09Sorrento Valley 106 3,411,905 8.6% 1.8% 10.4% 11.4% 46,699 49,546 0 0 0 $1.39South Bay 498 13,557,015 7.0% 0.1% 7.1% 7.4% 47,691 42,857 0 0 0 $0.58Torrey Pines 67 5,032,857 14.9% 0.5% 15.4% 15.7% 14,184 42,843 0 0 238,930 N/ATOTAL 3,874 116,204,396 9.8% 0.6% 10.4% 11.3% 849,193 1,236,739 0 123,400 3,984,684 $0.81North CountyCarlsbad 484 14,999,770 13.7% 0.1% 13.9% 14.4% 63,687 108,030 0 0 1,357,132 $0.98Escondido 636 7,175,725 5.4% 0.2% 5.6% 6.5% 70,473 30,912 0 0 39,500 $0.72Oceanside 394 8,014,725 13.8% 0.2% 14.1% 15.5% 105,017 220,086 0 0 1,227,361 $0.63San Marcos 491 8,634,579 5.9% 0.3% 6.2% 6.9% 61,468 97,165 0 0 53,000 $0.92Vista 530 13,374,822 7.3% 0.1% 7.4% 8.1% 75,329 107,756 0 0 231,432 $0.68TOTAL 2,535 52,199,621 9.7% 0.2% 9.8% 10.6% 375,974 563,949 0 0 2,908,425 $0.79I-15 CorridorPoway 215 8,196,473 4.5% 0.5% 5.0% 5.1% 7,087 (24,770) 0 129,845 447,900 $0.79Rancho Bernardo 146 9,559,699 17.2% 0.0% 17.2% 16.4% (75,421) 71,875 0 0 0 $1.01Scripps Ranch 75 2,145,501 20.5% 3.8% 24.3% 24.4% 2,106 (17,943) 0 0 540,000 $0.96TOTAL 436 19,901,673 12.3% 0.6% 12.9% 12.6% (66,228) 29,162 0 129,845 987,900 $0.95SAN DIEGO COUNTY COMBINED INDUSTRIAL / R&DTOTAL 6,845 188,305,690 10.0% 0.5% 10.5% 11.3% 1,158,939 1,829,850 0 253,245 7,881,009 $0.83QUARTERLY COMPARISONQ2 2012 6,845 188,305,690 10.0% 0.5% 10.5% 11.3% 1,158,939 1,829,850 0 253,245 7,881,009 $0.83Q1 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 $0.81
* 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
Q2 2012
P. 2 | cOllIErS INtErNAtIONAl
MARKET REPORT | Q2 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 2012Q2
Vaca
ncy
Rate
SF (M
illio
ns)
Net Absorption New Supply Vacancy
NEW SUPPLY, ABSORPTION AND VACANCY RATES
8.0%
9.5%
9.0%
9.1%
18.5%
11.0%
13.8%
14.0%
0% 5% 10% 15% 20%
I-15 Corridor
North County
Central County
S.D. County
R&D Industrial
INDUSTRIAL VACANCY RATES Q2 2012
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
$ /
SF /
Mon
th (N
NN
)
Industrial R&D Combined
HISTORICAL RENTAL RATE TRENDS Industrial, R&D and Combined Rates Quarterly Average Asking Rate Per SF Per Month (NNN)
45.0%
29.8%
14.3% 5.9%
5.0% <= 2,000 SF [243]
2,001 - 5,000 SF [161]
5,001 - 10,000 SF [77]
10,001 - 20,000 SF [32]
>= 20,001 SF [27]
INDUSTRIAL LEASING ACTIVITY BY TENANT SIZE Percentage of Total Leases Completed in Q2 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 2012Q2
Vaca
ncy
Rate
SF (M
illio
ns)
Net Absorption New Supply Vacancy
NEW SUPPLY, ABSORPTION AND VACANCY RATES
8.0%
9.5%
9.0%
9.1%
18.5%
11.0%
13.8%
14.0%
0% 5% 10% 15% 20%
I-15 Corridor
North County
Central County
S.D. County
R&D Industrial
INDUSTRIAL VACANCY RATES Q2 2012
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
$ /
SF /
Mon
th (N
NN
)
Industrial R&D Combined
HISTORICAL RENTAL RATE TRENDS Industrial, R&D and Combined Rates Quarterly Average Asking Rate Per SF Per Month (NNN)
45.0%
29.8%
14.3% 5.9%
5.0% <= 2,000 SF [243]
2,001 - 5,000 SF [161]
5,001 - 10,000 SF [77]
10,001 - 20,000 SF [32]
>= 20,001 SF [27]
INDUSTRIAL LEASING ACTIVITY BY TENANT SIZE Percentage of Total Leases Completed in Q2 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/month range. The Q2 2012 average rate of $0.83/SF/month is still 16% less than the historical high.
lEASING ActIVItY
around 540 leases were completed in Q2 2012, totaling approximately 3.2 million SF. 89% of all leases were 10,000 SF or less, while only 11% of all leases were over 10,000 SF in size. Smaller tenants made up a larger proportion of all leases signed in Q2 and had a 13% increase in deal volume over Q1.
www.colliers.com/sandiego
maRKET REpORTSAN DIEGO cOUNtY
www.colliers.com/sandiego
Industrial market posts stellar absorption in Q2 Positive demand seen in almost every submarket
MArKEt OVErVIEW San Diego County’s industrial/R&D continued its fourth straight quarter of positive demand with an outstanding 1.16 million SF of net absorption. The first of this year posted over 1.83 million
SF of net absorption which beat out the last half of 2010 which posted nearly 1.7 million SF. Robust leasing activity in Q3 and Q4 last year led to increased occupancies in Q1 and Q2 this year. Leasing activity continued to be strong in the first half of the year which should equate to
continued substantial net absorption for the last six months of the year. net absorption for 2012 will likely be between 2.2 and 2.6 million SF with vacancy standing between 10.1% and 10.3%.
The may 2012 San Diego County unemployment rate measured 8.8%, exhibiting no change from april. The California unemployment rate decreased (-0.1%) in may and stood at 10.4% while the national rate increased (+0.2%) to 7.9%. as of may 2012, San Diego County experienced a year-over-year increase in non-farm employment totaling 13,400 jobs. The combined industry sectors of “Trade, Transportation, and Utilities” and “manufacturing” – the two predominant industrial-utilizing employment sectors – posted a net increase of 1,600 jobs over the same period.
in march, 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 fifth consecutive month of
increases that was driven primarily by significant gains in local consumer confidence and
decreased initial claims for unemployment insurance. initial claims for unemployment insurance have decreased for seven consecutive months. Help wanted advertising has had 16 months of consistent growth.
MArKEt trENDS
massive positive demand drove countywide net absorption to nearly 1.2 million SF in Q2 and 1.8 million SF year-to-date. in 2012, net absorption is trending toward exceeding 2 million SF, making it potentially the best year for demand since 2006. no new construction was completed in Q2 but nearly 130,000 SF will be completed for the year. Vacancy stood at 10.5% and will settle near 10% by year-end.
MArKEt INDIcAtOrS
INDUStrIAl VAcANcY rAtESQ2 2012
Q2 2012 Q3 2012 (P)
VAcANcY
NEt ABSOrPtION
cONStrUctION
rENtAl rAtE
Q2 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 2012Q2
Vaca
ncy
Rate
SF (M
illio
ns)
Net Absorption New Supply Vacancy
NEW SUPPLY, ABSORPTION AND VACANCY RATES
8.0%
9.5%
9.0%
9.1%
18.5%
11.0%
13.8%
14.0%
0% 5% 10% 15% 20%
I-15 Corridor
North County
Central County
S.D. County
R&D Industrial
INDUSTRIAL VACANCY RATES Q2 2012
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
$ /
SF /
Mon
th (N
NN
)
Industrial R&D Combined
HISTORICAL RENTAL RATE TRENDS Industrial, R&D and Combined Rates Quarterly Average Asking Rate Per SF Per Month (NNN)
45.0%
29.8%
14.3% 5.9%
5.0% <= 2,000 SF [243]
2,001 - 5,000 SF [161]
5,001 - 10,000 SF [77]
10,001 - 20,000 SF [32]
>= 20,001 SF [27]
INDUSTRIAL LEASING ACTIVITY BY TENANT SIZE Percentage of Total Leases Completed in Q2 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 2012Q2
Vaca
ncy
Rate
SF (M
illio
ns)
Net Absorption New Supply Vacancy
NEW SUPPLY, ABSORPTION AND VACANCY RATES
8.0%
9.5%
9.0%
9.1%
18.5%
11.0%
13.8%
14.0%
0% 5% 10% 15% 20%
I-15 Corridor
North County
Central County
S.D. County
R&D Industrial
INDUSTRIAL VACANCY RATES Q2 2012
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
Q207
Q307
Q407
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
$ /
SF /
Mon
th (N
NN
)
Industrial R&D Combined
HISTORICAL RENTAL RATE TRENDS Industrial, R&D and Combined Rates Quarterly Average Asking Rate Per SF Per Month (NNN)
45.0%
29.8%
14.3% 5.9%
5.0% <= 2,000 SF [243]
2,001 - 5,000 SF [161]
5,001 - 10,000 SF [77]
10,001 - 20,000 SF [32]
>= 20,001 SF [27]
INDUSTRIAL LEASING ACTIVITY BY TENANT SIZE Percentage of Total Leases Completed in Q2 2012
inched down by 17 basis points to 0.5% in Q2 making it the lowest rate recorded by Colliers since tracking started twelve years ago. This sublease vacancy rate equated to space of nearly 956,000 SF countywide.
Vacancy has tended to remain stable in the 11%-12% range for almost three years, in part due to comparable levels of new construction (supply) and net absorption (demand). However, the Q2 drop to 10.5% is the first time vacancy has been
below 11% since Q2 2009. Even conservative estimates of demand should place vacancy in the low-10% range by year-end and in the mid-9% range a year from now.
NEW SUPPlY no new construction has been completed year-to-date although 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 7.88 million SF with 69% of this space concentrated in just four submarkets: Otay mesa, Carlsbad, East County and Oceanside. Even with increasing demand, the majority of immediate to mid-term future development will be concentrated in build-to-suits.
512 offices in 61 countries on 6 continentsUnited States: 125Canada: 38Latin america: 18Asia Pacific: 214
EmEa: 117
• $59.6 billion in annual transactions
• 1.0 billion square feet under management
• Over 12,500 professionals
MARKET REPORT | Q2 2012 | INDUSTRIAL | SAN DIEGO COUNTY