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San Diego County’s softened economy made its effects known in the retail market during Q1 2008. Vacancy experienced an uptick from 3.4% at year-end to 3.7% in Q1 as overall retail space demand – as measured by net absorption – totaled nearly a negative 200,000 square feet. The East County and North County were the most adversely affected by decreased demand.
In Q1, just over 134,000 square feet was completed. All these retail centers were under 20,000 square feet other than two Downtown developments under 40,000 square feet. Additionally, just over 683,000 square feet is currently under construction. Future development remains constrained as only 2.2 million square feet – or less than a two-year supply of space -- is proposed for the future. More than 60% is concentrated in the North County.
Retail sales activity has dropped off considerably with only 37 sales in Q1. If this rate of sales activity continues throughout 2008, the year would end with two-thirds the average sales count of the last three years. Decreased activity has been a symptom of various reasons including tighter credit standards, seller expectations paradigm shift, and increased concern over consumer confidence translating into weakened spending. However, sales prices continue to rise and cap rates have been dropping continuously.
Contact Chris Reutz at 858.677.5385 for more information.
  San Diego Knowledge Report - Retail - 2008Q1.pdf
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