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For a second consecutive quarter, the industrial / R&D vacancy rate remained relatively unchanged, posting a Q1 rate of 8.4%. This was a mere four basis points higher than the vacancy rate at the end of 2007. San Diego’s vacancy rate is comparable to the nation’s as a whole – 8.1%. With slowing construction activity and steady tenant demand countywide, vacancy should stay below 9% for the remainder of the year and potentially decrease in late-2008 or 2009.
First quarter combined industrial / R&D net absorption totaled 308,953 square feet. Demand has been strong for the last four quarters with over 1.6 million square feet of net absorption.
In Q1, only 124,021 square feet was added to the market. By year-end, only an additional 1.1 million is expected to be completed. This year, construction activity will be at the lowest level since 1994. The 1.0 million square feet under construction at the end of Q1 was 50% less than the five-year average of 2.3 million square feet per year. Since 2005, the amount of space under construction has steadily decreased each year.
Contact Chris Reutz at 858.677.5385 for more information.
  San Diego Knowledge Report - Industrial - 2008Q1.pdf
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