SAN DIEGO-While recovery is on the horizon for San Diego’soffice market, the first quarter gave the year anuninspiring start. After two years of healthy growth, withrecord-breaking leasing activity in 2010 and net absorption of860,000 square feet in 2011, the office market hit a flat spot inthe first quarter of 2012, according to a report just released byJones Lang LaSalle.

However, the market is showing signs of recovery with decliningvacancy rates, an increase in active requirements and improvedtransaction fundamentals (longer terms, higher rents and fewerlease concessions) vs. what was seen in 2009/2010, executives fromCushman & Wakefield tell GlobeSt.com.

JLL’s report indicates that leasing activity dropped 40% and themarket recorded a minor occupancy loss with negative net absorptionof 57,000 square feet. But tour activity has increased, andlandlords like The Irvine Co. have begun todisplay their confidence in a recovery by raising asking rates inkey submarkets.