SAN DIEGO-Office and industrial vacancy rates dropped as the San Diego County economy remained strong during the third quarter and continued to add jobs, according to a new report.

Biotech and telecommunications are leading the charge in the county, where forecasters are optimistic that the expansion will continue well into the next year, Jerry Holdner, VP of marketing for Voit Commercial Brokerage, tells

The local economy added an estimated 36,000 jobs in 1999 and is on pace to add another 30,000 in 2000. San Diego County’s jobless rate was 3% in September–a command performance compared to the state’s already low rate of 4.8%.

Even with the expectation of an economic slowdown and new construction waning, demand still remains strong, as evidenced by the almost 7.7 million sf of industrial, research & development and office absorption this year.

“The majority of this absorption can be attributed to businesses in San Diego county expanding, along with some new and start-up businesses coming in,” Holdner says.

The industrial market’s third-quarter vacancy rate fell to 6.36%, which will likely mean a 5% to 7% price hike over the next year for both lease and sale property, Holdner says. Currently, there is more than one-million sf of industrial space under construction and another 1.55-million sf in the planning pipeline.The R&D market also continues to grow, with vacancy rates below 10%, even though new space has been added at a record clip in recent quarters. Most speculative developments are now staying on the drawing board until more space is pre-leased, Holdner says.

Vacancy rates continued their downward spiral in the third quarter to 5.66%, despite an explosion in new construction.

“These impressive figures should put pressure on pricing over the next year, and we should see lease and sale rates increase by at least 5% over the next 12 months,” Holdner says. “The current average asking lease rate for office product in San Diego County is $2.02 per sf on a full-service gross basis, breaking the $2 mark for the first time.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.


GlobeSt Net Lease Spring 2024Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join now!

  • Free unlimited access to's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including and

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.