Is the Market Absorbing New Industrial Construction?

Ryan Spradling (L) and Bryce Aberg (R)

The industrial market in San Diego rebounded in the second quarter, following slow leasing activity at the start of the year. According to recent research from Cushman & Wakefield, the market has 632,000 square feet of positive net absorption in the second quarter, making it the strongest quarter leasing activity in the last three years. As a result, occupancy gains in the first half of the year topped the first half of both 2017 and 2016. Most of the occupancy gains were driven by new construction deliveries, however, industrial vacancy rates for the quarter inched up nominally 10 basis points to 4.9%.

“While distribution users absorbed the most square footage in the second quarter of 2018, manufacturing tenants are the most active in the market,” Bryce Aberg, executive director at Cushman & Wakefield, tells GlobeSt.com. “Over twenty percent of the tenants currently looking for space have a manufacturing requirement. Last Mile-related business increased their demand for Retail Trade and Warehousing/Transportation space as a result of increased consumer demand for faster delivery of online goods.”