San Diego is quickly recovering, as demonstrated by a tremendous increase in investment sales activity and new construction from Downtown to Camp Pendleton. While economic recovery has had its ups and downs throughout the industry, the San Diego market has demonstrated that it is strong enough not only to survive, but also to prosper.

Investment dollars have returned to San Diego, as quality product is trading hands across the office, industrial and retail sectors. In 2011, more than 280 investment sales were completed across all property types, nearly double the number that occurred in 2009. In addition, more than 10 million square feet of space changed hands through investment sales alone last year, while San Diego's retail sector posted its highest volume of investment dollars since 2005. The overall market is recovering as well, as we came into 2012 with higher occupancy in industrial, office and retail properties than we have seen in the past two years.

One major area of activity positively affecting the market is construction. According to data from the Construction Industry Research Board, San Diego County construction activity increased by 46% year-over-year in the first 10 months of 2011.

A myriad of projects is already underway in the area, with more in the works. One example is a newly proposed, 417,000-square-foot office build-to-suit for LPL Financial, which will be located in University Towne Center next to La Jolla Commons and the I-805, to be developed by Hines for delivery in late 2013. Also in UTC, there is work being done on a site owned by Alexandria Real Estate Equities. The 123,429-square-foot office build-to-suit for Illumina, a global company that develops solutions for DNA, RNA and protein analysis.

Throughout the county, new hospitals, student housing and even a new courthouse and central library are being built. Many are public projects, which are financed by public funds on a local, regional, state or national level. Hospital construction has been an enormous part of the San Diego market over the past two years. Palomar Pomerado Hospital in Escondido is nearing completion of its 740,000-square-foot Palomar Medical Center West, and work is underway on a $456-million, 383,000-square-foot Cardiovascular Institute in La Jolla for Scripps Health. The facility is slated for completion in 2015.

Downtown, the new 467,000-square-foot courthouse is under construction, and will likely be completed by November 2012. Also Downtown, the new 498,000-square-foot Central Library is being built, with an estimated completion date of August 2013.

Community colleges are seeing an enormous amount of activity as the San Diego Community College District completes a $1.55-billion school bond construction program. Nearly a million square feet will be developed across San Diego City College, Miramar College and San Diego Mesa College.

While construction activity is booming, the majority of these projects are not speculative. If no spec development begins and product continues to be taken, there will be segments of the market where product won't be able to meet demand needs in the next 12 to 24 months. Developers should be on the lookout, positioning themselves for the next cycle.