New Wave of Industrial Supply Coming to San Diego
New Wave of Industrial Supply Coming to San Diego
It is also incredibly supply-constrained with a lengthy entitlement process that often stretches for more than five years. That entitlement process adds to the construction costs, which local developers estimate has increased by nearly 20 percent in the last two years.
And in North County, where industrial development is catered toward a more 'creative' type industrial environment, similar to the ones offered in creative office projects, it is not uncommon for construction to cost upwards of $200 per square foot.
Conversions to creative office and biotech/lab space eat away at inventory. Amp&rsand in Mission Valley, CA is a creative office redevelopment going up at the site of the former Union Tribune printing and distribution property - chipping away at nearly 200,000 square feet of space. Another example is the conversion of nearly 250,000 square feet of industrial space in Carlsbad, CA into the Atlas creative office campus.
Industrial development may not return to the sustained level of development of the heady prerecession days, when it was common for more than 2.5 million square feet to be under construction. However, developers are currently underway on 1.6 percent of inventory, or about 3.1 million square feet - the most this cycle by a considerable margin.
Some tenants are expanding into build-to-suits. One is General Atomics. It is increasing its Poway footprint by 300,000 square feet at the Ridgeview Business Park. In Escondido, CA, Badiee Development is building the 212,000-square-foot Exeter Industrial Park for Atlanta-based Veritiv. It was one of the fastest developments from the initial design to development in San Diego history for a building its size - the development site was only purchased last August - according to the developer.
Of the more than 3 million square feet of inventory that has delivered since 2016, less than 25 percent is still available. For 2016 deliveries, 20 percent is still available; only 5 percent is available in the 1 million square feet that delivered in 2017; and more than 70 percent is still available in deliveries so far in 2018.
With recently delivered space and space under construction, more than 2.5 million square feet of new inventory is still available for lease, providing tenants plenty of options across the San Diego, although only two properties will hold a 200,000-square-foot tenant.
Article Resource: CoStar
  
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