The new construction pipeline for industrial product in San Diego continued to grow in the third quarter even as the market vacancy increased. New construction activity grew to 4.2 million square feet in the market, according to a report from JLL, including nearly 1 million square feet of speculative development. Despite the destabilization in the market due to the pandemic, new industrial supply is in high demand and continues to lease quickly upon or even prior to delivery, and there is little fear of over development.

"Approximately 4.4 million square feet of new Low Finish warehouse product is expected to be built over the next three years," Greg Lewis, EVP at JLL, tells GlobeSt.com. "The vast majority of this product will be located in Otay Mesa where larger parcels of land still exist."

The vacancy rate has increased nominally during the pandemic, but over the last two years, the vacancy rate in the market has been stable at or near 4.5%. "Overall vacancy for industrial has remained steady at around 4.5% since the beginning of 2018 despite nearly 5 million square feet of new construction deliveries over the last three years," says Lewis.

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.