North County Becomes the Epicenter of Industrial Development

North San Diego County is seeing the most industrial development activity in the Greater San Diego market. Of the 3 million square feet of industrial development activity in the San Diego market, 2 million square feet is in North County. Within North County, Carlsbad is seeing a bulk of the development. Ryan Cos. is building one of those projects, the 411,000-square-foot Pacific Vista Commerce Center. The market is seeing tremendous demand for industrial product, and with limited land, North County has become the natural place for new construction.

“Central San Diego is essentially out of land to do large developments. So, the majority of the industrial development is happening in South San Diego County along the US Mexico Border or in North County, which we define as Oceanside, Carlsbad, Vista, San Marcos and Escondido,” Ryan Grove, director of real estate development with Ryan Cos, tells GlobeSt.com. “In North County alone, there is 2 million square feet of industrial project under construction, and of that, 75% of that is taking place in Carlsbad. There is a number of projects under construction, and I think it is safe to say that in the entire county there are about 3 million square feet of projects under construction.”

While there is strong demand for new, class-A industrial product, North County is seeing a differnet mix of users. In Central San Diego County, biotech and science users have really dominated the market—and they are willing to pay top dollar. In North County, there is a more diverse tenants mix. “We are not seeing the biotech users as much. In North County, most of the drivers are action sports companies, food services, technology and last-mile distribution centers as well as some medical device companies,” explains Grove. “E-commerce users need to be where homes are for delivery, and we do anticipate more activity from the last-mile users for that reason.”

Many tenants are migrating north—or south, which is also seeing significant industrial development—to find better quality space and larger floor plates. Some of the demand is new to the market as well. Grove doesn’t expect this activity to change, and as a result expects healthy leasing activity and preleasing activity on new development. “Our market continues to be so tight. County wide—and it depends on who you talk to—we have a vacancy rate of about 4%,” says Grove. “With this low vacancy and supply constraints, tenants are migrating out of Central San Diego and into North County or South County because they need to expand.”