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The Q2 countywide total retail vacancy rate increased to 5.3% compared to 4.8% in the previous quarter and 3.7% one year ago. About 6.7 million square feet currently sits vacant, equivalent to the total retail inventory in the entire city of Encinitas. Direct vacancy measured 4.8%, while sublease vacancy remained unchanged at 0.5%.
The total vacancy rate is likely to go up as more retailers close stores in the upcoming months. However, the rate of increase experienced during the last few quarters should slow. To date, the most vulnerable retailers have been the smaller “mom-and-pop” tenants who don’t possess the deep pockets of national credit chains. However in the months ahead, some of these traditionally resilient national tenants could become prey to decreased consumer spending, resulting in bankruptcy as credit still remains difficult to obtain.
Net absorption totaled a negative 254,572 square feet in Q2. New construction activity has slowed with about 375,000 square feet completed in the first half of 2009 (approximately 206,000 square feet completed in Q2). An additional 331,343 square feet is under construction. New supply has had a negligible impact on overall vacancy and will have even less of an impact as new construction will be nearly non-existent in 2010.
Contact Chris Reutz at 858.677.5385 for more information.
  San Diego Knowledge Report - Retail - 2009Q2.pdf
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