Why Industrial Buyers Like Central San Diego

SAN DIEGO—With an extremely low vacancy rate and the hopes of increasing rental rates, industrial investors are bullish on the Miramar submarket of central San Diego, Colliers International's Evan McDonald tells GlobeSt.com exclusively. McDonald and Colliers' Derek Hulse recently represented seller Providence II Centerpointe LLC in the sale of 7737 Kenamar Ct. here to Kenamar Group LLC. The property is part of Centerpointe Court, a four-building industrial park in the Miramar submarket that was previously sold by McDonald and Hulse to Providence Capital in 2011. We spoke with McDonald about the industrial sector in this submarket and how it compares to others in San Diego.

GlobeSt.com: How would you characterize the industrial sector of Miramar submarket?

McDonald: I would characterize it as one of the most central, largest industrial submarkets in San Diego. It's composed of approximately 14 million square feet of inventory, and it's easily accessible via the I-805 and the I-15, which are connected by Miramar Rd. It's in close proximity to residential and one of the top submarkets in San Diego.

GlobeSt.com: Is there any industrial development in the works for this submarket?

McDonald: There's a lack of land and no new development. There are a couple of small projects planned in the near future, but nothing of note to talk about.

GlobeSt.com: What is the capital markets' view of this submarket for industrial?

McDonald: Investors are bullish on central San Diego industrial markets, and that's because of a couple of things: first, the vacancy rate is extremely low, down to pre-recession levels. Also, another key factor is that investors are buying in anticipation of continued increases in rents and dropping vacancies. These primary submarkets are all kind of complementing each other; these are extremely healthy markets right now.

GlobeSt.com: How does this submarket compare to other industrial markets in San Diego?

McDonald: San Diego is composed of about 187 million square feet of industrial, and it's a mix between R&D and pure industrial. Pure industrial here is 135 million square feet, and it's actually the first time since pre-recession that vacancy levels have been under double digits across the board in each industrial submarket here. Even Otay and Oceanside had been flirting with 10% to 15% vacancy, but recent Colliers research numbers show that it's below double digits for the first time in a long time. I'm negotiating on a 20,000-square-foot brewery right now in Miramar. There are 100 breweries in San Diego currently, with almost 50 more in the pipeline. Breweries are great for job creation and economic benefits.