IRR-San Diego Mid-Year Viewpoint 2015 Local Market Report - Retail
Compared to the rest of the country, the San Diego retail market is one of the strongest with low vacancy rates and strong fundamentals. Over the last few publications, there has not been much change in either rental rates or vacancy rates across the three center types, indicating stable market conditions. However, this is forecasted to change based on interviews with market participants and IRR’s market research.
It is estimated that 2.6 million square feet will added to the market over the next two years. This includes projects like One Paseo (a proposed, controversial mixed-use project that will have 250,000 square feet of retail space) and Westfield at UTC (an existing mall slated to add 750,000 square feet).
Since the great recession, the San Diego market took five years to recover the 1.2 million square feet of negative absorption. Since then, the market is experiencing its highest positive absorption in eight years. Increasing demand coupled with low construction should continue to keep vacancy rates relatively low.
From a rental standpoint, community retail centers experienced the largest increase over the last six months, while regional mall and neighborhood retail centers experienced relatively stable conditions. Desirable submarkets such as La Jolla and the Gaslamp Quarter in Downtown San Diego will continue to attract tenants and command significantly high rental rates ($5.50 to $7.50 per square foot, triple net).
Overall, the outlook for the San Diego retail market is positive. Conditions are the best they have been in the last six years, and it is projected that conditions will continue to improve over the next 12 to 36 months.
Download the full version PDF of this Local Market Report below. It includes graphs and tables.
IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.