Middle Market Digest: This Week in Southwest

This week kicked off with good news coming out of San Diego. According to Cushman & Wakefield’s latest quarterly report, the market has seen four consecutive quarters of occupancy gains and declining vacancy rates. The market, however, was not alone. Deal and employment activity was healthy throughout the Southwest market, along with development activity coming out of Phoenix. In Orange County, office transactions dominated, and Culver City, a 10,000 square foot development site nabbed a $7 million price tag, or $700 per square foot. Here’s a look at this week’s trends, announcements and deals that you may have missed in Southern California, Utah, Arizona and Nevada.

BY THE NUMBERS

SAN DIEGO—The retail market in San Diego is on an upswing, with four continuous quarters of declining vacancy and occupancy growth. Since the second half of 2016, the market has seen more that 500,000 square feet of occupancy gains. The region’s overall retail vacancy rate shed another 10 basis points since the close of 2017 to an even 4% at midyear 2018. San Diego’s retail vacancy has fallen 40 basis points since a year ago and is now 320 basis points below its peak of 7.2% recorded eight and a half years ago at the end of the last recession—since that period, tenants have now absorbed a whopping 2.1 million square feet across the county on a net basis. Oceanside and Carlsbad were the best performing submarkets, gaining 56,000 square feet and 16,000 square feet, respectively, in the second quarter. La Mesa/Lemon Grove was also a top performing market with 15,000 square feet. Lease rates have followed with the countywide average asking rent for retail space was $2.32 per square foot per month on a triple net basis as of midyear 2018, a 4% increase from year-end 2017.