What Caused SD’s Industrial-Absorption Bounce-Back?

Williams: “The demand supports further positive absorption. The limiting factor will be supply of available space, especially for well-located, good-image and functional product.”

SAN DIEGO—San Diego’s Q2 rebound in industrial absorption can be attributed to large life-science lease transactions and increased warehouse-distribution activity in certain submarkets, CBRE’s industrial and logistics expert Sean Williams tells GlobeSt.com. According to a recent report from the firm, after two consecutive quarters of negative net absorption, the industrial market rebounded as 349,745 square feet was absorbed in Q2 2017. Year-to-date net absorption is near even at 24,989 square feet.

The report also shows that over the previous two quarters, the overall industrial rate softened as large available spaces were vacated; however, that trend turned in Q2 as the rate decreased 10 basis points to 4.7%. Average asking rates for high-finish product increased quarter-over-quarter by $0.02 to $1.39 triple net lease, and low-finish product experienced a small rate decrease of $0.01 to $0.85 NNN, but remained near the post-recession high of $0.86 set in Q1 2017.