SAN DIEGO—Being recognized by Nat Geo as a 'World's Smart City' will help San Diego, but the fundamentals already in place are the real drivers behind the tech and life-sciences industries here, Voit Real Estate Services' VP of market research Jerry Holdner tells GlobeSt.com. After the firm's research department released its mid-quarter office and industrial reports for San Diego, we spoke exclusively with Holdner about life-sciences development, office leasing and industrial growth in the market.

GlobeSt.com: With San Diego being recognized as a “World's Smart City” by National Geographic Channel, do you expect tech and life-sciences development to increase in the near future?

Holdner: The life-sciences sector in San Diego is as strong as it has ever been, though venture-capital investment has waned just a little bit. The life-sciences developers BioMed Realty, Alexandria and HCP have all been active in the market during this period of expansion. Being recognized by National Geographic as  a “World's Smart City” will only help the region, but the fundamentals that are already in place, such as the area's educated workforce and desirable location, are the real drivers behind this industry locally. In the long term, San Diego has traditionally been an innovative area that has acted as an incubator for the industry. But most often, these locally grown firms are purchased by out-of-market investors and either wholly or partially relocated. Because of this, the life-science sector locally can be volatile at times and that is always a consideration.

GlobeSt.com: How do you see the office leasing picture changing with current and anticipated growth in the East Village of Downtown San Diego?

Holdner: The East Village area of Downtown San Diego is in the midst of a tremendous boom in residential construction, and there is a buzz surrounding this neighborhood. This will only augment the office demand in downtown San Diego. But, in terms of office product, the East Village area of Downtown is still in its infancy. The vast majority of the office product downtown is centered around the central business district and courthouse area on the other side of Downtown. We do anticipate more mixed-use and creative-office development coming to East Village, but at a smaller scale than the residential boom that is currently underway.

GlobeSt.com: Why is industrial vacancy decreasing and rent growth increasing at a slower pace in San Diego than in other Southern California markets?

Holdner: The San Diego industrial market is smaller and more localized than other Southern California industrial markets due to higher land costs and lack of access to the Los Angeles/Long Beach ports. This has shaped San Diego into a more-steady and less-dynamic industrial market. But the San Diego industrial market is healthy enough to have brought vacancy down to historically low levels. Also notable, the industrial lease rates in San Diego are already higher than the other Southern California markets.