San Diego Industrial Vacancy Rate Grows

Paul Britvar

San Diego’s industrial vacancy rate ticked up in the second quarter along with negative absorption. According to the latest quarterly report from Newmark Knight Frank, the vacancy rate climbed to 5% in the second quarter, a significant increase over the 4.1% vacancy rate at the end of the second quarter last year. Absorption clocked in a -84,000 square feet. The increase in vacancy comes alongside a rise in speculative development activity.

“Negative absorption goes with the territory of a positive development climate; however, I project that in the next 6 to 12 months the vacancy rate will tick back down in lieu of continued activity on the spec-development front,” Paul Britvar, director at Newmark Knight Frank, tells GlobeSt.com. “To qualify that further, new developments in peripheral submarkets are delivering the industrial user with exactly what is needed, which gives San Diego as a whole the ability to better service the industrial and logistics demand, ultimately catering to a strong and robust population, which is on-track to continue year-over-year growth in the future. As industrial and distribution tenants shuffle themselves to and from, older buildings that suffer from obsolesce will be re-positioned for alternative uses, such as churches, arenas for indoor recreation, Flex, R&D type uses, among others.”