San Diego Office Market
Source: Tom Hennessy & Scott Coronel July 19, 2016
San Diego
has seen approximately 263,000 square feet of new office space delivered in
2016. Some of the larger developments include Eastgate Terrace in UTC and Torrey
Point project in Carmel Valley. Net
absorption in San Diego has remained flat in contrast to the national trend as
a result. We are seeing a continual
increase in rental rates for high-end office space but overall rent growth is
beginning to flatten. Class-A office
rent has reached an average of $2.50-$3.00 per square foot with high-end spaces
averaging closer to $3.50-$4.00 per square foot. Across the country demand is being driven by
technology and financial service firms and we are seeing a similar trend
here. One such example is Google’s
recent entrance to the market into a 60,000 square foot space in Sorrento
Mesa. Tech and bio-medical companies are
moving to San Diego to tap into the high-caliber talent while taking advantage
of lower overhead costs as compared to markets such as San Francisco and Los
Angeles.
In order to
stay competitive landlords are making capital improvements to convert
traditional office space to “creative office” to accommodate today's work
environment by transforming common areas and adding additional amenities. Some examples include creating indoor and
outdoor communal spaces to promote collaboration, updating entryways, and
adding gyms and game areas. We are also
seeing a strong trend towards co-working spaces being added. With advances in technology, there is a
desire to have more independence from the office and be able to have
flexibility to work remotely. Companies
are also getting on board with this idea because it allows them to decrease
their overall costs as well as source talent from further distances. Landlords are quickly realizing that having
this type of creative space is crucial towards long term tenant retention.
So where
will the San Diego office market go from here?
As the gap between Class A and Class B office rental rates widens
tenants are now gravitating towards Class-B space as a more economical option. Class-B landlords that recognize this trend
and invest in creative upgrades are likely to see more interest in their
buildings. Today’s workforce is not looking at vertical movement to upper
management the same way they were a few years ago. More importance is being
placed on the live work balance and “creative workspace” helps fill this
role.
DISCLAIMER: This blog/article
has been curated from an alternate source and is designed for informational
purposes to highlight the commercial real estate market. It solely represents
the opinion of the specific blogger/author and does not necessarily represent
the opinion of Pacific Coast Commercial.
All content provided
on this blog is for informational purposes only. The owner of this blog makes
no representations as to the accuracy or completeness of any information on this
site or found by following any link on this site. The owner of will not be liable for any
errors or omissions in this information nor for the availability of this
information. The owner will not be liable for any losses, injuries, or damages
from the display or use of this information.
Keywords: San Diego Commercial Real
Estate For Sale, Commercial Property In San Diego, Commercial Real Estate In
San Diego, San Diego Investment Real Estate, Commercial Property Management In
San Diego, San Diego Commercial Property Management, Commercial Property
Management San Diego, Managed Commercial Property San Diego, Commercial
Property For Sale San Diego, San Diego Commercial Real Estate Leasing
Comments
Post a Comment