Nationally, commercial markets took a dip in the last quarter of 2000, according to the report. But NAR expects general improvement in the second half of this year, as interest rates stay low and the economy regains some strength.

San Diego joins Boston, Austin, San Jose and Orange County among markets expected to post the biggest rent growth in 2001. Nationally, the association predicts "positive but moderating" office demand, with vacancy factors rising modestly to 10.8%. Rents, adjusted for inflation, will grow at a national average of 3.8%.

The report belies a dismal assessment of San Diego County's office market based on first-quarter absorption rates. Office leasing plummeted to just 62,200 sf in the first three months, with many tenants postponing expansion plans in the midst of an unsettled stock market and concern over California's energy crisis, according to a separate report recently released by Burnham Real Estate Services.

However, the report by San Diego-based Burnham notes that the office market remains in good balance, with a vacancy rate of just 7.4%—-up only slightly from 6.5% at the end of 2000-—and suggests the slowdown is likely to be temporary.

The NAR study also ranks San Diego among Austin, San Jose, Northern New Jersey and the East San Francisco Bay Area as the hottest multifamily markets of the year. Nationally, some 42,000 net units were absorbed in the fourth quarter and construction activity in most parts of the nation remained strong.

Instant Insights /

Report: San Diego Among Nation's Leaders in Office, Apartment Sectors

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