May 14, 2015
Market reports we are watching agree that the San Diego retail real estate arena is a good place to be for landlords. The region has high demand and little available space, making rents increase and vacancy levels get tighter.
CBRE says that the 333,476-square-foot absorption rate, due largely to the delivery of the new La Costa Town Square shopping center, which is at at 264,367 square feet and developed by Terramar Retail Centers.
However, that one asset didn’t make this the only reason why the market is doing well. CBRE says it is the third consecutive quarter of positive net absorption. There should be more, the firm notes, with 3.5 million square feet in the pipeline.
Voit Real Estate Services’ take is that the unemployment rate keeps dropping, from 5.8 percent in January, to 5.3 percent in February. This helps vacancy rates. The availability rates for open-air centers during the first quarter came in just under 7.5 percent, while malls had just only over one percent of free space.
There is little construction, but some could be alleviated by Westfield’s renovation of its Westfield Plaza Camino Real from enclosed to open air. This lack of new construction should keep vacancy rates low, and lease rates high.