Office Vacancy Hits Lowest Levels in a Decade

The San Diego office vacancy rate is hitting record lows for this cycle. According to a new report from Colliers International, the vacancy rate in the first quarter was 11.4%—relatively flat over a year ago, but the lowest since the third quarter 2006, when the office vacancy hit 9.9%. Not surprisingly, rents have also increased as a result of the decreasing supply to $2.66, up from $2.51 a year ago, and absorption was up significantly to 157,912 square feet from negative 58,325 square feet a year ago. To take a closer look at the market and leasing activity, we sat down with Tim Cowden, SVP at Colliers, for an exclusive interview.

GlobeSt.com: What is driving the vacancy rate to record lows this cycle?

Tim Cowden: In general, we have limited inventory coming online, and each building is getting more difficult to build. San Diego County is reaching its development saturation, and we are getting to the point where we have to tear down properties to build new ones. That being said, we are really seeing all businesses firing on all cylinders. We have full employment and business is good, pretty much across the board. Barriers to entry of additional product when combined with good solid business growth results in shrinking vacancy rates and rising rents.