The just-released C&W report shows the I-15 Corridor led allareas of the county with its direct positive absorption. The nextbest-performing area was Carlsbad with 119,416 sf of positiveabsorption. All other submarkets reported negative activity "as thecounty continues to adjust to corporate belt-tightening in the wakeof slower economic growth," the C&W team says.

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Among the high-profile tenants taking space in the corridor areSony, Yahoo! and the Paradigm Group, all of which are expandingtheir San Diego presences with locations at the Point in RanchoBernardo. Chase Manhattan has reaffirmed its commitment to the areaby renewing its 127,000-sf lease in Bernardo Heights CorporateCenter.

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Tom van Betten, a C&W director, explains that, even thoughoffice leasing activity has slowed countywide, most companiesrecognize there is a limited supply of land for development. And ifthe potential for future expansion is an issue, they must considerlocating in the I-15 Corridor, he says.

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Van Betten says that developers have been quick to recognize thepotential of the I-15 Corridor market and have responded with classA corporate campuses. For example, Granum Partners of Los Gatos, CAhas just finished construction on the first of three class Abuildings in the 330,000-sf Bernardo Terrace Corporate Center.

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"We saw tremendous opportunity in this niche market, which soonwill rank on a level with Del Mar Heights [another popular class Amarket in the county]," observes Greg Eger of Granum. He says theI-15 location benefits from a plentiful supply of executive andworkforce housing, which is a key selling point for companies whoseemployees are struggling with rising costs of fuel andtransportation.

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Eger echoes van Betten's observation that companies looking toexpand in the future will find few choices, other than the I-15area, able to accommodate growth. "For any company who anticipatesfuture growth with space needs above 25,000 sf, there is a verylimited supply," he says. "Once the economy turns, there will bepent-up demand for quality space in good locations, but the hiatusin new construction means this demand will fall well short ofsupply."

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Another company involved in the I-15 Corridor is San Diego-basedCisterra Development, which has a track record of national andlocal development including the class A DiamondView Tower inDowntown San Diego. Cisterra has plans to redevelop and expand thePoint in Rancho Bernardo into a 500,000-sf class A corporate campusto meet the projected needs of image-conscious corporate users.

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Jason Wood, senior vice president with Cisterra, points out thatin recent years Del Mar Heights has been the preferred location fortop-tier tenants, with demand helping to push rental rates to $4per sf or more. The new premier developments in the I-15 Corridor"are positioned very well" in comparison to the product in Del MarHeights, Wood says, but they have the added benefit of asking ratesof approximately $1 per sf per month less.

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C&W research shows the average direct class A asking rentsin the I-15 Corridor stand at $3.03 per sf per month, on par withlast year at this time. Van Betten says companies "are acting nowto lock in space that they know won't be available down the road,particularly at these rates."

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Besides the high-profile tenants like Sony and Yahoo!, otherrecent I-15 Corridor newcomers are Bridgepoint Education, LockheedMartin, National Pen, Carl Zeiss and Marvell Semiconductor. Thosecompanies combined have signed more than 507,400 sf in leasesvalued in excess of $162 million, all for Scripps Ranchbuildings.

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Kilroy Realty, a Los Angeles-based REIT that historically hasbeen a key player in Del Mar Heights and the SR-56 area, is nearingcompletion on the third and last buildings for its 434,000-sfKilroy Sabre Springs campus along Evening Creek Drive. The154,000-sf project is 100% leased to Bridgepoint Education. Othertenants within the campus include Bank of America, Raymond JayLucia Cos. Inc., Liberty Mutual and 1st Pacific Bank.

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In addition to leading San Diego County in leasing activity, theI-15 Corridor also leads the region in new construction with morethan 1.1 million sf under way. These projects include the Summit atRancho Bernardo, where the first building in a 75-acreredevelopment and expansion project is under construction.Additionally, Sony is under way on its 450,000-sf, 11-storyheadquarters tower along Via Esprillo in Rancho Bernardo withcompletion slated for December 2009.

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In other development, Bernardo Terrace Corporate Center justdelivered its first 110,000-sf building. Its other two buildingswill go up in phases or build-to-suit basis. The project sits on 27acres overlooking the Rancho Bernardo landscape, Lake Hodges andI-15.

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