Small-box industrialproperties dominate owner-user deals in San Diego. According toresearch from JLL, more than 90% of owner-userdeals in the market are for properties under 30,000 square feet. Ofthose deals, more than 75% were for buildings under 10,000 squarefeet. The 10,000-square-foot size range is the most popular forowner-users. Chris Baumgart and StevenField of JLL have just sold a 22,000 square foot buildingto Sun Harvest LLC for $199 per square foot, illustrating thepricing trends for these properties.

"Owner-user building purchases are primarily dominated bymanufacturing, construction, consumer products and e-commercecompanies within the North County San Diego market," Baumgart tellsGlobeSt.com. "While the investment market saw a significantincrease in 1031 exchange requirements in 2019, primarily privatecapital investors.  Many of the 1031 exchange requirementswere from out of the market investors looking for higher returnscompared to markets in Los Angeles and Orange County."

The trend may be shifting, however. In 2019, demand for largerbuildings started to increase, and Baumgart expects the trend tocarry through 2020. "One trend we saw in 2019, that will carry into2020 is the increased demand from buyers looking for buildings30,000 square feet and greater," he says. "Many of these buyers wehave seen in the market already own but are looking for largerfacilities to help accommodate business growth."